Wednesday, May 1, 2019

Changes for non-owner importers on import VAT

Lucy Sutcliffe of MHA MacIntrye Hudson, Baker Tilly International's UK member firm, comments

HMRC have announced that as of mid-July 2019 they will only allow a company who imports goods into the UK (‘Importer of record’) to recover Import VAT (via a C79 certificate) on UK import declarations if they are also the owner of the goods or have the title to the goods.

Historically and confusingly, HMRC indicated that, as an ‘importer of record’, an importer only needed to be using the goods for the ‘purpose or course of their business’ to recover any associated import VAT. This change has finally clarified this position.

Importers who regularly use freight and shipping agents may find the biggest changes. However, the clarification by HMRC will also affect those companies based abroad but operating with UK subsidiaries, who often act as the ‘importer of record’ and subsequently recover the import VAT on the parent’s behalf but do not formally take ‘title of the goods’, even though they may still use the goods for the purpose of their business in the UK.

As a result, companies may find themselves having to register for VAT in the UK, take title or ownership of the goods and act as the ‘importer of record’ to be able to successfully reclaim any Import VAT.

Please note this allows an appropriate transitional period for businesses to make any necessary changes to ensure the correct procedures are being adopted.

Please contact the Lucy Sutcliffe of Baker Tilly International’s member firm MHA Macintyre Hudson to understand further the potential impact.

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