One area that businesses must consider as part of their importing and exporting in Ireland and the UK is VAT. The Incoterms for contracts can lead to unplanned consequences for UK traders not registered for VAT in Ireland or Irish Traders not registered for VAT in the UK.
Thus, the VAT status of traders should be a key determinant of customer/supplier contracts. Also relevant is Postponed VAT.
Irish Revenue have recently published a notification to clarify some points on Postponed VAT accounting (PVA). Our contacts in Revenue have indicated to us that this has been done to in response to some confusion and uncertainty amongst some traders around Postponed VAT.
Specifically, there is a lack of understanding as to what is Postponed VAT accounting and who can claim it?
PVA provides a cash flow benefit for VAT registered traders who import goods into Ireland from no-EU countries. It enables you to account for the import VAT on your VAT return, as opposed to on the importation of the goods. This effectively means that you reclaim VAT at the same time as you pay it on your VAT return, hence, no impact on cashflow.
Some common mistakes we come across regularly below:
- UK Trader acting as the importer in Ireland and has to be pay import VAT unintentionally. Claiming this back is a cumbersome process
- Irish Trader acting as importer in UK and has to be pay import VAT unintentionally. Claiming this back is a cumbersome process
- Importer (who was not vat registered) wanted to claim postponed VAT – More common than you would think!
- VAT registered Importer not authorised for postponed VAT
- A third-party company paid the VAT and wants to reclaim it.
- The haulier has listed themselves as the importer
- VAT return not completed correctly to account for Postponed VAT
If you have any questions on any VAT matters, then please contact the team.