Importing & Exporting Goods and VAT

​​​​Importing Goods

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Goods imported into the UK will normally attract VAT at the same rate as goods purchased in the UK (20% or 5% reduced rate). 

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The VAT payable to HMRC will normally have to be paid on entry to the UK or declared and paid on the VAT return of the business importing the

 

goods if they are using the Postponed VAT Accounting Procedure.

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If you import goods into the UK you will need to make a customs declaration which can either be done by:

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• The Business or individual Importing the goods

• A Transport / Freight Forwarder,  Customs Agent or Broker or Parcel Operator who will bring the goods to the UK and / or make the necessary customs declarations on your behalf.

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Businesses bringing goods in to the UK will require and EORI number (Economic Operators Registration and Identification Number)  which will need to be used when completing Customs Declarations.

 

If you are using a freight forwarder, customs agent etc, you will need to provide them with your EORI number and details of the goods you require to be imported. 

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Note: if you are bringing goods into the UK for personal use only, you will not require an EORI

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There are different ways UK VAT registered businesses can pay for VAT on goods imported into the UK. These are listed below.

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• Paying immidiately on importation

• Use the Postponed Accounting Procedure 

• Deferring the payment using a Duty Deferment Account

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Paying VAT Immediately

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If you pay VAT on Goods imported immediately you will be able to recover the VAT on your VAT return using a VAT import Statement as evidence.

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You can also use immediate payment methods such as:

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• Approving a payment through your online bank account

• Online or telephone banking

• Card

• CHAPS (Clearing House Automated Payment System)

• Bacs (Bankers Automated Clearing System)

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Postponed VAT Accounting Procedure 

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Using the postponed accounting procedure, allows VAT registered businesses to include the import VAT payment as part of their VAT return and has the added benefit of being able to reclaim the VAT on the same return. In effect resulting in zero payment to HMRC.   

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Postponed VAT Accounting Requirements:

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• Goods imported are for use in the business (or can be a mixture of business / non business where the split is unknown at the time of import) 

• Your VAT registration number must be included on your Customs Declaration

• Inform your Frieght Forwarder or Customs Agent that you wish to use postponed VAT accounting so that they can complete the customs declaration appropriately

• You do not have to directly inform HMRC you are using postponed VAT accounting

• Note: You must be the legal owner of the goods to recover the VAT

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Duty Deferment Procedure

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Alternatively, for businesses that have larger and regular imports, they maybe able to defer paying import VAT by setting up a Duty Deferment Account with HMRC. This will allow HMRC to collect the VAT automatically from their account.  A duty deferment account lets the importer (or someone who represents them) make one payment a month through Direct Debit instead of paying for individual consignments.

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You do not need to apply for a deferment account to defer import VAT if you are using postponed VAT accounting for imports.

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To complete your application you’ll need your business’s:

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• EORI number

• Name associated with your EORI number

• Registered company number (if this applies), in the UK this will be from Companies House

• UK address associated with your EORI number

• Correspondence address

• VAT number (if this applies)

• Company directors’ and officials’ details, including date of birth

• Person responsible for customs authorisations, their details and practical customs experience

• Your estimated debt​

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Note there are strict rules surrounding the operation of duty deferment accounts and if not adhered to can lead to goods not being cleared by HMRC. You will need a C79 importation certificate to reclaim the VAT on your VAT return.  See below link detailing the procedure.

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Check how to get your import VAT certificate (C79)

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Recent FFT case - Piramal Healthcare UK Limited vs HMRC

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Piramal Healthcare UK Limited (“Piramal”) is a pharmaceutical company based in the UK. As part of its business, it imports pharmaceutical goods into the UK and, historically, has paid the import VAT on the value of those goods. The supplier does not make any charge for the supply of the goods and remains the owner of the goods.

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Having provided certain services in relation to the goods, they are either sent back to the customer, sent to third parties for further processing or sent to clinics for use in clinical trials.

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Until 2018, Piramal claimed the import VAT which it paid as an input tax credit on its VAT returns.

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HMRC issued Piramal with a formal decision that it was not entitled to claim credit for the import VAT as the goods:

 

• Were not used for the purposes of Piramal’s business in the sense that the cost of the goods did not form part of any onward supply made by Piramal.

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HMRC made an assessment to recover VAT which they considered Piramal had over-claimed and also withheld a repayment for import VAT.

 

Key Points:

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• Piramal did not itself make any onward supply of the goods. The only supply it made was the supply to the owner of the goods of the services which it provided.

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• Piramal did not own the goods and the ownership remained with the customer
   

The UK.s FTT ruled that import VAT can only be recovered if the imported goods are used as a cost component of an onward supply.  (Basically the VAT paid must be attributable to an onward supply). This was not the case with Piramal.

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So to ensure the import VAT incurred can be recovered:

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• ​The goods imported must be for use in your business (cost component to make onward taxable supplies) 

• Have the right to dispose of them (usually as owner) and importer of record

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See Full Case decision here: TC 08966.pdf (tribunals.gov.uk) 

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Another recent case is  (TSI Instruments Limited v The Commissioners for HMRC) See below

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​https://caselaw.nationalarchives.gov.uk/ukftt/tc/2025/1278​

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​​​​Exporting Goods

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VAT is a tax on goods used in the UK and you do not charge VAT if goods are exported from:

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• Great Britain to a destination outside the UK

• Northern Ireland to a destination outside the UK and EU .

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You can zero rate the sale, as long as you get and keep evidence of the export, and comply with all other conditions. You must also make sure the goods are exported, and you must get the evidence within 3 months from the time of sale.

 

This can be longer for goods that need processing before export and for thoroughbred racehorses.

 

The time of sale is the earlier of the day you:

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• send the goods to your customer

• get full payment for them

 

You must not zero rate sales if your customer asks you to deliver them to a UK address.

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