Postponed VAT Accounting: What Is It?

As the UK is no longer a part of the EU’s Single Market and Customs Unions, there are additional implications for any businesses in the Republic of Ireland wishing to import from the UK.

 

Postponed VAT accounting was introduced by the Irish government for Republic of Ireland VAT registered businesses to avoid the payment of import VAT at the point of entry. Most other EU countries offer similar measures for VAT imports. 

 

The above legislation allows for “accountable persons’” within Ireland who acquire goods from countries outside the EU VAT area (in this case the UK), use the postponed accounting facility. The aim of this blog is to act as a guide for small and medium-sized businesses in Ireland that wish to import goods from the UK and avail of postponed VAT accounting rules.

 

 

What Is Postponed VAT Accounting?

 

It’s a way for VAT registered businesses in Ireland dealing with the VAT from import goods from Great Britain (England, Scotland and Wales). There are separate procedures for trading between the Republic of Ireland and Northern Ireland.

 

Before the 1 January 2021, companies that imported goods to Ireland from non-EU countries paid import VAT at the point of entry unless they had a deferral arrangement with Revenue.

 

What It Means For Your Business If You Trade With the North

 

Northern Ireland Protocol states special rules for trade between Ireland and Northern Ireland, (although that may be likely to change soon) which means there are no significant changes to the current situation. The VAT rules stay the same for products but not for services.

 

The ruling per the Revenue Commissioners, is that postponed VAT accounting will not apply to goods brought in from Northern Ireland. 

 

How Does Postponed VAT Accounting Work?

 

Any imported goods to Ireland from Great Britain, should be recorded by showing the import VAT in your VAT return for the current period using the ‘reverse charge’ accounting procedure.

This is like the way import VAT is handled on imports from other EU member states.

What VAT Rate Do You Need To Pay?

 

Goods imported to Ireland are liable to VAT at the same rate that applies to similar goods sold within the State. That means if you import goods that are currently sold at zero-rate then these will also be zero-rated for importation purposes.

 

What You Need To Know If You Trade With Great Britain

The new amended VAT 3 return form includes an additional field for postponed accounting called PA1. The value of goods imported under the  measure  is captured in your VAT return.

 

The year-end VAT Return of Trading Details (RTD) has been amended to include additional fields PA2, PA3 and PA4. (See “The Revised VAT Return of Trading Details Form” at the end of this blog.)

 

Companies will have to meet certain criteria to avail of postponed VAT accounting. Revenue have the power to exclude traders who don’t fulfil specific requirements such as compliance with tax and customs regulations from postponed accounting. 

Companies registered for VAT and Customs & Excise (C&E) when the Brexit transition period ended on 31 December 2020, won’t need to apply for postponed accounting – they would have been automatically entitled to avail of the facility.

If your company was VAT registered but not registered for C&E on 31 December 2020, you must register for C&E and obtain an Economic Operators Registration Identification (EORI) number.

 

Conclusion On Postponed VAT Accounting

It’s a simple measure that aims to ensure Irish businesses that trade with the UK can meet their VAT obligations without significant disruption to their business. 

An added benefit is if you import goods from other non-EU countries, you can also avail of the arrangement.

 

The Revised VAT Return Of Trading Details Form

 

As mentioned in the “What you need to know if you trade with Great Britain” section the amended RTD now includes additional fields PA2, PA3 and PA4 to capture the value of goods imported to Ireland. Below is a simplified visual of this amendment.

 

 

New Postponed Accounting Columns	Descriptions
Column 1	Value of supplies of goods and services
Column 2	Value of acquisitions from EU countries Net of VAT, Postponed accounting & VAT free imported parcels
Column 3	Value of Stock for Resale (Purchase, intra-EU acquisitions, postponed accounting & imports)
Column 4	Value of other deductible goods & services (purchases intra-EU acquisitions, postponed accounting & imports)

 

New Postponed Accounting Boxes	Description
New PA boxes	Total of all figures relating to postponed accounting that
PA2	Total value for acquisitions from EU countries Net of VAT, postponed accounting, and VAT free imported parcels
PA3	Total value of Stock for resale (purchases, intra-EU acquisitions, postponed accounting & imports)
PA4	Total value of other deductible goods & Services (purchases, intra-EU acquisitions, postponed accounting & imports)

 

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