UK Import VAT - Postponed VAT Accounting

[former_member1286208]

Scenario 1

We are looking for support to confirm the correct way to deal with Postponed VAT Accounting (PVA) on imports of goods into the UK.

The business transaction is that the business imports goods and is charged a net price by the supplier. The goods are then transported to UK via a third party logistics provider, who will charge a service fee and any duties and fees at Customs on our behalf. Import VAT is declared at UK Customs, but not physically paid. Instead it is recorded on the UK VAT return as an input and output VAT amount based on a Customs value price (net supplier price plus other freight charges).

We are trying to understand how this should be reported correctly in SAPbyDesign. We have tried to report the transaction in two parts, which do not necessarily occur at the same time:

1. Post the supplier invoice as normal, under Tax Code 13 – Imported Goods (Supplier Invoice) – Tax Event 200
2. Post the PVA using Tax Code 23 – Imported Goods Standard Rate 20% Reverse Charge – Tax Event 204

Posting (1) does not appear on the UK VAT return, which I believe is correct.

Posting (2) maps to Boxes 1, 4 and 7 on the UK VAT return. The VAT figure entered is per the PVA statement provided by the UK tax authorities. This generates a purchase item (which is recorded in Box 7), which is then recorded to the ledger under the same supplier. However, this approach then double counts the original purchase expense at point 1 (although booked at an uplifted customs value).

Please can you advise what it is the best practice approach for this scenario? (1) Should posting 2 use the original supplier or a different HMRC account? (2) How do we avoid double counting the original expense already booked at 1?

Scenario 2

In addition, we have a similar query in respect of Tax Code 14 (Import VAT, Standard Rate) – Tax Event 201, which we are trying to use to record import VAT physically paid by the business to the tax authorities, that needs to be reclaimed in Box 4 and 7 of the UK VAT return.

As above, we post a supplier invoice as normal under Tax Code 13 – Imported Goods.

Then the import VAT amount (based on a statement provided by HMRC) is booked under Tax Code 14. This generates input VAT recoverable and a related purchase expense amount. As for scenario A above, how should we be posting this to avoid duplicating a purchase on the ledger?

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