From 11pm on 31st December 2020 Postponed Accounting arrangements may be applied to all imports from all third countries including Great Britain (UK not including NI). Northern Ireland (NI) remains within the EU VAT regime in respect of goods, but not services, therefore trade in goods between Ireland and Northern Ireland continues as before from a VAT perspective. However, trade in goods with Great Britain is treated as imports and exports.
Goods that are acquired from outside the European Union by accountable persons are treated as imports. Goods purchased from Great Britain and brought into Ireland are now treated as imports. Postponed Accounting arrangements enable an accountable person to self-account for VAT on imports on their VAT3 Return so that import VAT may, subject to the usual rules on deductibility, be reclaimed at the same time as it is declared on a VAT3 Return. This is a straightforward reverse charge transaction, without the need to pay the import VAT at the point of importation. In other words, it is recorded in the VAT3 Return as VAT which is simultaneously deducted on a ‘purchase’ and charged on a ‘sale’ in a similar way to the manner in which intra-community acquisitions are currently recorded on the return.
The VAT3 Return has been amended to include an additional field PA1 to capture the Customs value of goods imported under Postponed Accounting as per Customs Declarations plus Customs Duty. The VAT is then accounted for at T1 and T2 (subject to the usual rules of deductibility). The VAT Return of Trading Details (RTD) has been amended to include additional fields PA2, PA3 and PA4 to capture the Customs value of goods imported under Postponed Accounting as per Customs Declarations plus Customs Duty. The use of Postponed Accounting is intended to alleviate cash flow issues which could arise following the departure of the UK from the EU, where VAT registered businesses may otherwise have to pay import VAT at the point of importation of goods and then recover the VAT when the next VAT return is filed.
Postponed Accounting entries on VAT3 return
The PA1 field on the VAT3 Return should include the Customs value of goods imported under Postponed Accounting as per Customs Declarations plus Customs Duty. This figure should include all goods imported under Postponed Accounting to which all VAT rates apply. Imported goods that are classed as zero-rated goods should also be included in the PA1 field if Postponed Accounting was applied on the Customs Declaration for these particular goods. The T1 figure on the VAT3 Return should include the amount of VAT applicable to the entry at the PA1 field on the return. The T2 figure on the VAT3 Return should also include the amount of VAT applicable to the entry at the PA1 field on the return.
Availing of Postponed Accounting
All accountable persons in Ireland who acquire goods from countries outside of the European Union VAT area may use the Postponed Accounting arrangements. All accountable persons who were registered for VAT and Customs & Excise (C&E) at 11:00pm on 31 December 2020 were given automatic entitlement to Postponed Accounting; therefore, there was no requirement for these traders to apply for Postponed Accounting. VAT registered traders who were not registered for C&E at 11:00pm on 31 December 2020 who wish to import goods into Ireland from that point in time must register for C&E, see C&E Economic Operators Registration Identification (EORI) Number – Registration on ROS for further guidance. Once registered for C&E, they will be given automatic entitlement to Postponed Accounting.
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