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Compliance & Tax

Exports & Imports

VAT Scenarios

We’ve prepared this guidance for businesses in England, Wales and Scotland. Different rules may apply for businesses in Northern Ireland.

Checklist

Make sure you have a GB EORI number

To import or export goods into the UK you will need an GB Economic Operator Registration and Identification (EORI) number. This is required for all businesses (traders and hauliers) moving goods into or out of GB.

The application process takes about five to ten minutes, but it can take up to a week to get the number.

In 2019 & 2020, HMRC auto enrolled VAT registered businesses with EU trade which did not have an EORI number. You can validate the number here -

EORI number validation⁠

⁠

Importing goods to Great Britain

✔️ Make customs declarations

The basic rules of customs are that imported goods need to be declared at the time of importation.

You’ll need the following information at hand.

⁠

Commodity code⁠

⁠

Country of origin

⁠

Custom procedure code⁠

⁠

Value of goods

The options are;

Choose to make the declaration yourself. Take advantage of the grants on offer by applying here -

Apply for grants to help your business with customs declarations⁠

⁠

Get someone else to deal with it. HMRC has a

list of registered agents⁠

to start with.

❗Between 1 January to 30 June 2021, if you are not importing

controlled goods⁠

, you can

delay sending HMRC⁠

the full information up for 175 days.

✔️ Pay customs duties

Once you make the customs declaration, you then have to make the necessary payments for import VAT, customs and excise duties.

Duties are calculated based on the type of goods and origin of the goods you import and can be looked up on

Trade Tariff: look up commodity codes, duty and VAT rates⁠

. Most goods with a value of up to £135 will usually not require any duty payments.

The options are;

Pay import VAT, customs and excise duty when your goods enter Great Britain. Only possible if you are a Direct Trader Input agent.

⁠

Set up a duty deferment account⁠

to make one payment a month and set up Postponed VAT Accounting

❗To avoid paying import VAT altogether as VAT registered business, HMRC has introduced Postponed VAT Accounting. This means that import VAT can be accounted for on the VAT Return in the following boxes. It works very similarly to the reverse charge mechanism with the net effective being no physical payment of import VAT.

Box 1 – VAT due on sales and other outputs: Include the VAT due in this period on imports accounted for through postponed VAT accounting.

Box 4 – VAT reclaimed on purchases and other inputs: Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting.

Box 7 – Total value of purchases and all other inputs excluding any VAT: Include the total value of all imports of goods included on your online monthly statement, excluding any VAT.

The feature to

manage Postponed Accounting in Xero⁠

has not yet been developed as of December 2020.

Exporting goods from Great Britain

❌ EC Sales List

England, Scotland and Welsh VAT registered businesses will no longer have to complete an EC Sales List

✔️ Make customs declarations

From 1 January 2021, you'll need to make customs declarations when exporting goods to the EU.

Similar to importing goods, you can either;

Choose to make the declaration yourself. Take advantage of the grants on offer by applying here -

Apply for grants to help your business with customs declarations⁠

⁠

Get someone else to deal with it. HMRC has a

list of registered agents⁠

to start with.

✔️ Check specific rules for your type of goods

Any export licence

Any marking, labelling, marketing standard for food, plant seeds and manufactured goods

Any rules around exporting alcohol, tobacco and certain oils

Examples

All businesses are UK VAT registered.

A UK based distiller who imports raw ingredients such as highly concentrated ethanol from Spain and sells distilled alcoholic drinks to individual customers across UK and Europe.

A UK based SaaS business that sells a project management software to businesses across the world.

A UK based gardening magazine business that sells a monthly subscription to its online magazine to enthusiastic gardeners all across the world.

A UK based business selling tampons to the customers in the UK and EU. Production and packaging is completed in Poland and shipped directly from there.