HMRC has issued Revenue & Customs Brief 02/19 which ‘clarifies’ its policy with regard to who/which entity is entitled to import goods and reclaim the associated import VAT.
To date HMRC has permitted a ‘person’ who does not actually own the goods at the point of entry into the UK to act as the ‘importer of record’. The declaration at the port of entry then generates the import VAT certificate (C79) which supports the import VAT reclaimed by the importer of record.
Whilst HMRC has historically accepted this position, as of 15 July 2019, only the legal owner of the goods will be entitled to reclaim the VAT paid when goods are imported.
The clarification, which in reality represents a significant change, will affect many businesses involved in the importation of goods.
Businesses should consider the impact of these changes and make arrangements to ensure any costs/disruption to the business are minimised. Contractual terms should be reviewed to ensure they remain relevant to the ‘new’ trading circumstances and business continuity risk is minimised.
On the basis that HMRC has stated that its guidance was previously unclear, it has confirmed it will not seek to assess retrospectively where the declarant was the ‘importer of record’ rather than the owner of the goods provided full VAT recovery was available. However, as a business, you should establish whether any historic assessments that have been issued within the last 4 years which may be appealable based on the revised policy.
This does represent a significant change which could adversely affect suppliers and customers in the supply chain both practically and financially. If the UK leaves the EU without a deal, the impact of this change may well be greater.
Our indirect tax team can assist you in dealing with the transition by reviewing your current supply chain, assessing the practical and financial risks on your day to day dealings based on current contractual arrangements and also recommend strategic solutions to minimise your potential exposure both financially and logistically.
For more information, please speak to your usual Wilkins Kennedy contact or our specialist VAT team.
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