If you import, acquire or buy goods or services from abroad you may have to pay VAT or account for it under the reverse charge procedure.
You must tell HM Revenue and Customs (HMRC) about goods that you import, and pay any VAT and duty that is due. How you do this may depend on whether the goods or services are received from an EU country or not. You may also be able to defer, suspend, reduce or obtain relief from import VAT.
Goods from EU countries
If you’re registered for VAT in the UK and receive goods from other countries in the EU you’ll normally pay VAT at the time the goods come into the UK. You’ll need to pay VAT at the same rate that you would have paid if you had acquired them from a UK supplier. This VAT is known as acquisition tax and you can normally reclaim this if the acquisitions relate to VAT taxable supplies that you make. If you‘re not already registered for VAT in the UK and acquire goods worth £81,000 or more in the UK from other EU countries, you may have to register for VAT in the UK.
Record-keeping for acquisition tax
You must enter the VAT details on your VAT Return. The time of supply for VAT purposes is the time of acquisition - normally, the earlier of:
- the 15th day of the month following the one in which the goods come into the UK
- the date the supplier issued their invoice
You must account for the acquisition tax on the return for the period in which the time of supply occurs, and may treat this as input tax on the same return.
Value of acquired goods
The value for VAT of any goods you bring into the UK is the same as the value for VAT of the goods had they been supplied to you by a UK supplier. You must account for the value of the goods or services in sterling, so if they were priced in a foreign currency you must convert their value first. You can do this using either the UK market selling rate at the time of the supply, as published in national newspapers or the rates of exchange published by HMRC, known as the period rate of exchange.
Intrastat Supplementary Declarations
You may have to complete an Intrastat Supplementary Declaration if your acquisitions of goods from the EU exceed an annual amount.
Goods from non-EU countries
If you import goods that you’ve bought from non-EU countries they’re normally charged at the same rate as if they had been supplied in the UK. But if you import works of art, antiques and collectors’ items they’re entitled to a reduced rate of VAT.
You can reclaim the VAT paid on the goods you’ve imported as input tax. You will need the import VAT certificate (form C79) to show that you’ve paid the import VAT. A shipping or forwarding agent can’t usually reclaim this input tax because the goods weren’t imported to be used in part of their business.
If the goods have been misclassified, you can get a refund of any overpayment that was made as a result of the misclassification. But you must complete form C285 and you must send a letter with it to declare that you won’t reclaim the input tax on the higher figure.
If you’re importing certain goods from outside the EU temporarily - that is, you intend to re-export them within 2 years - you can use temporary importation to obtain total or partial relief from import duties. If you import goods temporarily but then for whatever reason choose to put them into free circulation in the UK, you’ll have to pay duty, import VAT - and compensatory interest for certain types of goods.
If you’re a UK trader and not registered for UK VAT you still have to pay the import VAT, but you won’t be able to reclaim it.
If you’re a non-UK trader and not registered for UK VAT you can arrange for an agent in the UK to import and supply goods on your behalf. The agent’s supply of services to you will be at the standard rate of VAT which you won’t be able to reclaim. But the agent will be able to recover the import VAT as input tax.
Valuation of imported goods
The value for VAT of imported goods is their customs value, determined by the rules in Notice 252, as well as:
- incidental expenses - such as commission, packing, transport and insurance costs incurred up to the goods’ first destination in the UK (including any expenses of this kind you incur on shipping the goods on to somewhere else in the EU, if you know at the time of importation that you’re going to do that)
- any Customs Duty or levy payable on importation into the UK
- any Excise Duty or other charges payable on importation into the UK - except the VAT itself
The value of VAT is normally added to box 22 of the import declaration automatically. If it needs to be calculated manually, you must enter the code ‘VAT’ in the rate column of box 47, and enter the value in the amount column.
Goods destined for another EU country
If you’re importing goods from outside the EU that are destined for another EU country, you must either
- pay UK import VAT and put the goods into free circulation
- place the goods under the external transit arrangement
If you pay UK import VAT, you may be able to obtain Onward Supply Relief.
Get a customs identification number
If you plan to import any goods from countries outside the EU you’ll need to get an EORI (Economic Operator Registration and Identification) number to deal with EU Customs authorities. You’ll need it when you supply information to customs authorities, for example when completing customs declarations.
Services received from overseas suppliers
When you buy services from suppliers in other countries, you may have to account for the VAT yourself - depending on the circumstances. This is called the ‘reverse charge’, and is also known as ‘tax shift’. Where it applies, you act as if you’re both the supplier and the customer. You charge yourself the VAT and then (assuming that the service relates to VAT taxable supplies that you make) you also claim it back. So the 2 taxes cancel each other out.
When the reverse charge applies
The reverse charge on services only applies when the supplier is in a different country from you, you’re in business, belong in the UK and receive either:
- one of the services that are covered by the general rule for place of supply of services
- certain other services covered in section 18.11 of Notice 741A
Dealing with the reverse charge
You calculate the amount of VAT (output tax) on the full value of the services supplied to you, and then enter on your VAT Return:
- the amount of VAT you calculated in box 1, and if you’re entitled to reclaim the VAT on your purchase of these supplies, also put the same figure in box 4 (this in effect cancels out the figure in box 1)
- the full value of the supply in both box 6 and box 7
Value of services from other countries
The amount of VAT payable of any service from another country is the same as the amount of VAT that would be paid if the service were supplied to you by a UK supplier for the same net amount. You must account for the value of the services in sterling, so you must convert their value into sterling if the services were priced in any other currency. You can find out more about the reverse charge and services supplied from abroad in Notice 741A .
Claiming relief on re-import exported goods
If you’ve exported goods from the EU and you re-import them, you may be able to claim back the VAT that you pay when you import them. If the goods were originally sent out of the EU temporarily - for example for exhibition, or because they were on sale or return and they were returned - there is no UK VAT due on import. Otherwise, you may be able to obtain Returned Goods Relief.
Returned Goods Relief
To qualify for Returned Goods Relief, the goods must have been exported from the Customs Union to a country outside the Customs Union, and must then have been imported back into (and gone into free circulation in) the Customs Union. The Customs Union is made up of the EU, Turkey, San Marino and Andorra. You can read more about Returned Goods Relief in Notice 236.
The original export must not have been a temporary export for processing or repair. If you specifically exported the goods so they could be processed, repaired, made up or reworked, then when you come to re-import the processed goods, you may be able to use Outward Processing Relief to obtain relief from customs duties - and possibly reduce the VAT chargeable.
New vehicles, boats and aircraft
In the EU most goods have VAT added to the price in the country where they’re purchased. However, if you plan to bring a new land vehicle, boat or aircraft into the UK from another EU country and it is intended for transporting passengers or goods, then UK VAT will be due if the vehicle, boat or aircraft is classed as a New Means of Transport.
When you bring a land vehicle permanently into the UK, you must notify HMRC using the Notification of Vehicle Arrivals system.
Boats and aircraft
VAT becomes due on the 15th day of the month following the month in which the boat or aircraft was made available to, or taken away by, the customer - sometimes referred to as the date of removal - or the date of issue of the VAT invoice, whichever is earlier. HMRC will calculate the amount of VAT you owe and send you a demand for payment. You must pay the amount of VAT on the demand within 30 days of the date on which it was issued.
Arrangements to defer or suspend payment
Normally, you pay any VAT due on imported goods outright at importation. For postal imports that don’t exceed £2,000 in value, you can leave the payment of the VAT until your next VAT Return.
Deferring import VAT payments
For larger payments, if you’re a regular importer, you can defer paying import duty and VAT by setting up an account with HMRC. Setting up a deferment account is free of charge, but you’ll need to arrange a bank guarantee. However, if HMRC authorises you to use Simplified Import VAT Accounting this guarantee can be reduced.
If you import goods from outside the EU on a temporary basis, you may not need to pay some or all of the import duty and/or VAT.
Goods imported to free zones
Free zones are designated areas where you can store goods from outside the EU without first paying import duties and import VAT. This is because they are treated as if they’re outside the customs territory of the EU.
If you supply goods and services to a customer within a free zone, then you should treat them as UK supplies. They will be subject to normal domestic VAT rules. However, there is an Extra Statutory Concession that allows goods supplied in a free zone to be zero-rated - but only on condition that the supplier and the customer have agreed that the customer will clear the goods for removal from the free zone, and will pay the import VAT.
This concession is available to all businesses supplying imported goods in UK free zones, regardless of whether the business is established in the UK. However, you can’t use it where the customer isn’t registered for VAT and doesn’t have to be registered.
If the goods are from outside the EU, then customs duty and import VAT is due when they’re released from the free zone into free circulation. If they are used and consumed within the free zone, then they’re considered as released from the zone, so you must put them into free circulation.
Goods stored under customs warehousing
If you import goods from outside the EU and store them under an inventory system known as a customs warehouse, payment of import duties and/or VAT can be suspended. A wide range of goods can be stored using a customs warehouse.
External and internal transit
If you use what’s known as community transit, you can move goods within the customs territory of the EU without paying import duties and other charges, including VAT, until they reach their final destination. You can read about the 2 types of transit procedure in Notice 702/9 (external transit and internal transit).