HMRC guidance on recovery of import VAT may require businesses to change existing import practices

HMRC guidance on recovery of import VAT may require businesses to change existing import practices

Mon 09 Nov 2020

HMRC has issued R&C brief 15/2020 clarifying their views on the entitlement to recover import VAT.  Despite a number of representations, their view is firmly that it is only the owner of the goods that is entitled. 

The Brief highlights some of the examples considered in HMRC’s review.  HMRC’s suggested approach in certain cases is for businesses to change their practice on import.  One example highlighted is for the retail sector for those businesses using Customs Warehousing and only calling off the stock (raising a purchase order) at a date sometime after the goods have been brought into the UK.  HMRC’s suggested approach in this case is that:

….retailers to take ownership of the goods prior to the goods being removed from the warehouse and prior to entry into free circulation. This would allow the retailer to both act as importer of record and recover the import VAT. There is no legal issue preventing a sale of the imported goods whilst within the warehouse regime and this would remove the need for overseas entities to register for UK VAT.

This may have cashflow and supply chain relationship matters that need to be dealt with.  For a further discussion of the indirect tax issues, please get in touch with a member of the Mazars indirect tax team.

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