Postponed VAT accounting for imports following the end of the transition period
As of 1 January 2021 – with the end of the Brexit transition period occurring on 31 December 2020 – businesses registered for VAT that import goods into the GB from anywhere in the world can use a new system called postponed VAT.
If you import goods from anywhere outside GB (or possibly the UK depending on the final rules) after the end of the transition period, and those goods are for use in your business, you can use postponed VAT accounting to avoid the requirement to pay import VAT immediately upon the goods entering the UK (e.g. at the port of entry).
This applies only to where the value of the goods exceeds £135.
For import below this amount ie £135 there is still the need to account for VAT via new e-commerce rules (even if the goods were not traded via e-commerce)
Vat on imports with a consignment value of £135 or lower will have a VAT applied at the point of sale, rather than applied as import VAT at customs. For B2C transactions this UK VAT will be charged and collected by the seller but for B2B transactions the VAT will be reverse charged to the customer. Read more here.
Navigation: Bookkeeping > Select Client > Purchase > Purchases > New Purchase
In the invoice creation screen, tick the checkbox that says 'Use postponed VAT accounting'. Then fill the rest of the information by selecting the supplier and allocating this purchase to the Import Purchase (12140) nominal account.
Ticking the new checkbox facilitates postpone VAT accounting, which will automatically post the entries to boxes 1, 4 and 7 otherwise boxes 4 and 7.