VAT – Postponed Accounting

Revenue eBrief No. 230/20

VAT – Postponed Accounting

A new Tax and Duty Manual – VAT – Postponed Accounting – has been published. It contains information on the procedures, conditions and operation of Postponed Accounting by accountable persons who import goods into the State from third countries.

Extract:

1. Introduction
   This guidance sets out the conditions attached to the use of Postponed Accounting arrangements by accountable persons who import goods into the State. Postponed Accounting arrangements may be applied to all imports from all third countries including Great Britain (UK not including NI).
   
   At the end of the transition period (11:00pm on 31 December 2020), the UK will leave the EU VAT regime, Customs Union and Single Market. As such trade with Great Britain will become third country trade, subject to Customs requirements and taxation at the point of importation.
   
   As provided for in the Withdrawal Agreement and the Protocol on Ireland/Northern Ireland, Northern Ireland (NI) will remain within the EU VAT regime in respect of goods, but not services, therefore trade in goods between Ireland and Northern Ireland will continue as before from a VAT perspective. However, trade in goods with Great Britain will be treated as imports and exports.
   
2. What is Postponed Accounting?
   Goods that are acquired from outside the European Union by accountable persons are treated as imports. Therefore, after the end of the transition period, goods purchased from Great Britain and brought into Ireland will be treated as imports.
   
   Postponed Accounting arrangements enable an accountable person to self-account for VAT on imports on their VAT 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 VAT return. This will be a straightforward reverse charge transaction, without the need to pay the import VAT at the point of importation. In other words, it will be recorded in the VAT 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 VAT 3 has been amended to include an additional field/box PA1 to capture the value of goods imported under Postponed Accounting (net plus carriage, insurance and freight). 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/boxes PA2, PA3 & PA4 to capture the value of goods imported under Postponed Accounting.
   
   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.
   
   Who can avail 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 are registered for VAT and Customs & Excise (C&E) at 11:00pm on 31 December 2020 will be given automatic entitlement to Postponed Accounting; therefore, there is no requirement for these traders to apply for Postponed Accounting.
   
   VAT registered traders who are 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.
   
   All new applicants for VAT Registration who wish to avail of Postponed Accounting
   should refer to Guidelines for VAT Registration.