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Paying and reclaiming VAT on imports and purchases from abroad

Generally speaking, VAT is payable on all purchases of goods and services that you buy from abroad at the same rate that would apply to the goods or services if supplied in the UK. You must tell us about goods that you import, and pay any VAT and duty that is due.

This guide explains how you need to report VAT paid on imports, how you may be able to reclaim it, and about various means whereby you may be able to defer, suspend, reduce or obtain relief from import VAT.

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VAT on imports of goods and services from European Union (EU) countries

If you import goods from other countries in the EU, technically known as acquisitions rather than imports, you will normally pay VAT at the time the goods come into the UK. The rate of VAT payable is the same rate that you would have paid had the goods been supplied to you by a UK supplier. This VAT is known as acquisition tax, and if you are registered for VAT in the UK you can normally reclaim this VAT, if the acquisitions relate to taxable supplies that you make.

If you acquire goods in the UK from other EU countries worth £67,000 or more and do not intend to use those goods to make taxable supplies, you may have to register for VAT in the UK.

More about acquisitions and registration requirements in VAT Notice 700/1

You must enter the VAT details on your VAT return. The tax point for VAT purposes is the time of acquisition - normally, the time the goods come into the UK. You must account for the acquisition tax on the VAT return for the period in which the tax point occurs, and may treat this as input tax on the same VAT return.

If you have already paid VAT on your purchase in the relevant member state, then provided you can show evidence of that, you can obtain a refund of the UK acquisition tax.

The tax value of any goods or services imported into the UK is the same as the tax value of the goods or services had they been supplied to you by a UK supplier. You must account for the tax value of the goods or services in sterling, so you must convert their value into sterling if the goods or services were priced in any other currency.

You may have to complete an Intrastat Supplementary Declaration if your imports from the EU exceed an annual amount - currently £260,000.

Get information about tax points and when transactions take place for VAT purposes

Find out about converting foreign currency transactions

More about completing Intrastat Supplementary Declarations in Customs Notice 60

Paying VAT due on services

The supplier of a service usually charges and accounts for VAT. However, in some circumstances when you buy services, you have to account for the VAT yourself. This is called the 'reverse charge', and is also known as 'tax shift'. Where it applies, you act as if you are both the supplier and the customer. Assuming that the service relates to taxable supplies that you make, there's no net cost to you - the two taxes cancel each other out.

When does the reverse charge apply?

The reverse charge only applies when the supplier is in a different country from you. It applies in three situations:

  • Where you belong in the UK and receive - from a supplier who belongs in another EU country - one of the services that aren't covered by the basic rule for place of supply of services.
  • Where the services are covered by what is known as European Community (EC) simplification. These are supplies such as intra-EC freight services, valuations of goods and most intermediary services. The reverse charge applies if you belong in the UK and the supplier belongs in another EU country.
  • Where certain other services are provided in the UK by a supplier who belongs to another EU country.

How do you deal with the reverse charge?

You calculate the amount of VAT - output tax - on the full value of the services supplied to you, and then fill in the relevant boxes on your VAT return as follows:

  • in box 1, put the amount of output tax you calculated
  • in box 2, if you're entitled to reclaim input tax on your purchase of these supplies, then put the same figure in box 4 - this in effect cancels out the figure in box 1
  • in box 6, put the total value of sales
  • in box 7, put the total value of purchases

Find out more about the basic rule for place of supply of services

More about the reverse charge in VAT Notice 741

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VAT on imports of goods and services from non-EU countries

VAT on imports of goods and services that you buy from non-EU countries is normally charged at the same rate as if the goods or services had been supplied in the UK. However, imported works of art, antiques and collectors' items are entitled to a reduced rate of VAT.

You can reclaim the VAT paid on the goods or services you have imported as input tax. You will need the import VAT certificate, form C79, to show that you have paid the import VAT. A shipping or forwarding agent cannot usually reclaim this input tax because the goods or services were not imported to be used in part of their business.

If the goods have been misclassified, you can get a refund of any overpayment that was made as a result of the misclassification, but you must complete form C285 and this must be accompanied by a written declaration that you will not reclaim the input tax on the higher figure.

Obtain form C285 Application for repayment/remission

If you are not registered for VAT in the UK

If you are a UK trader but are not registered for VAT in the UK, you still have to pay the import VAT but you will not be able to reclaim it.

If you are a non-UK trader and are not registered for UK VAT, you can arrange for an agent in the UK to import and supply goods on your behalf. The agent's supply of services to you will be standard rated for VAT which you will not be able to reclaim, but the agent will be able to recover the import VAT as input tax.

Valuation of imported goods for VAT purposes

The value for VAT of imported goods is their customs value, determined according to the rules described in notice 252, plus:

  • incidental expenses such as commission, packing, transport and insurance costs incurred up to the goods' first destination in the UK - and including any expenses of this kind that you incur on shipping the goods on to somewhere else in the EU, if you know at the time of importation that you're going to do that
  • any customs duty or levy payable on importation into the UK
  • any excise duty or other charges payable on importation into the UK - except the VAT itself

The value of VAT is normally automatically added to box 22 of the import declaration. If the VAT needs to be calculated manually, you must enter the code 'VAT' in the rate column of box 47, and enter the value in the amount column.

Find the valuation rules in VAT Notice 252

Importing goods destined for another EU country

If you are importing goods from outside the EU which are destined for another EU country, you must either pay UK import VAT and put the goods into free circulation, or place the goods under the external transit (T1) arrangement. If you pay UK import VAT, you may be able to obtain relief known as Onward Supply Relief (OSR). Read more about external transit in the section in this guide on payment of VAT on goods from abroad and arrangements to defer or suspend payment.

Find out more about obtaining import VAT relief for goods supplied onward to another EU country

Find out which countries and territories are part of the UK in VAT Notice 703

Find out which countries and territories are included in the EU VAT area in VAT Notice 703

Temporary importation

If you're importing certain goods from outside the EU temporarily - that is, you intend to re-export them within two years - you can use Temporary Importation (TI) to obtain total or partial relief from import duties. If your goods can benefit from TI total relief, then input VAT is also suspended. However, for most goods you'll have to provide security for the total amount of import duty and VAT.

Under TI partial relief, you have to pay the import VAT when the goods enter the EU.

If you import goods temporarily but then for whatever reason choose to put them into free circulation in the UK, you will have to pay duty, import VAT - and compensatory interest for certain types of goods.

An ATA Carnet is a booklet of vouchers used for temporary imports, and which takes the place of normal customs declarations. If you use one when you import goods temporarily, you don't have to provide security for customs duty.

More about temporary importation relief in VAT Notice 200

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Claiming relief if you re-import exported goods

If you have exported goods from the EU and you re-import them, you may be able to claim back the VAT that you pay when you import them. If the goods were originally sent out of the EU temporarily - for example for exhibition, or because they were on sale or return and they were returned - there is no UK VAT due on import.

Otherwise, as long as the goods weren't repaired or processed in any way while they were out of the EU, you may be able to obtain Returned Goods Relief (RGR).

Find out more about obtaining import VAT relief for goods originally exported for processing or repair

RGR

To qualify for RGR, the goods must have been exported from the Customs Union - which comprises the EU, Turkey, San Marino and Andorra - to a country outside the Customs Union, and must then have been imported back into, and gone into free circulation in, the Customs Union. The original export must not have been a temporary export for processing or repair.

The goods must have been declared for free circulation within three years of their last export from the Customs Union, although this time limit can be waived in certain circumstances.

The goods must also meet extra conditions to get relief from Common Agricultural Policy (CAP) charges if, when they were exported from the EU under the CAP procedures, they:

  • required an export licence
  • were exported under an Advance Fixing Certificate
  • were subject to a claim for any refund or benefited from any other financial advantage
  • were subject to any levy

To claim RGR on re-import you must normally complete a full Single Administrative Document (form C88). You must provide evidence of the previous export from the Customs Union, EU or UK, and the duty status of the goods at the time of export.

Re-importing RGR goods by post

If you re-import goods by post, the package should be marked 'Returned Goods', and the sender's declaration (form CN22 or CN23) must be attached to the package or travel with it. We will send you a form which you should complete and return with proof of export for the goods to be released. If you don't return this, you'll have to pay the VAT and duty before the goods will be released.

Exporting goods for return under RGR

Exporting goods for return under RGR is exactly the same as exporting goods that you do not expect to be returned. However, if you use the duplicate list procedure, when you return to the UK you must:

  • mark on the copy of the list any goods that have been left abroad
  • complete Part B of form C&E 1246
  • present the goods, the list and the form to a Customs officer in the red channel

More about the duplicate list procedure in VAT Notice 236

Obtain form C&E 1246 Returned Goods Relief

More about returned goods relief in VAT Notice 236

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New vehicles, boats and aircraft

In the EU most goods have VAT added to the price in the country where they're purchased. However, if you plan to import into the UK a new vehicle, boat or aircraft intended for transporting passengers or goods, then VAT will be due if the vehicle, boat or aircraft is classed as a New Means of Transport (NMT).

For customs purposes, vehicles, boats and aircraft are classed as NMT if they are either less than six months old or have travelled less than 6,000 kilometres. In addition:

  • boats must be more than 7.5 metres long
  • aircraft must have a take-off weight of more than 1,550 kilograms
  • vehicles must have an engine with a displacement or cylinder capacity of more than 48 cubic centimetres, or be constructed or adapted to be electrically propelled using more than 7.2 kilowatts

Vehicles which are not suitable for use on public roads, and hot air balloons, are not means of transport and are not covered by the scheme.

VAT becomes due on the 15th day of the month following the month in which the NMT was made available to, or taken away by, the customer - sometimes referred to as the date of removal - or the date of issue of the tax invoice, whichever is earlier.

We will calculate the amount of VAT you owe and send you a demand for payment. You must pay the amount of VAT on the demand within 30 days of the date on which it was issued.

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Payment of VAT on goods from abroad and arrangements to defer or suspend payment

Normally, you pay any VAT due on imported goods outright at importation. For postal imports that don't exceed £2,000 in value, you can leave the payment of the VAT until your next VAT return.

Deferring import VAT payments

For larger payments, if you are a regular importer, you can defer paying import duty and VAT by setting up an account with us. You can then put off payment by an average of 30 days and your goods will normally be cleared for release more quickly.

Setting up a deferment account is free of charge, but you'll need to arrange a bank guarantee. However, if we authorise you to use another arrangement - Simplified Import VAT Accounting (SIVA) - this guarantee can be reduced.

More about deferring import VAT payments in Customs Notice 101

Find out how SIVA can reduce the financial guarantees you have to provide if you defer import duty and VAT

Temporary imports from outside the EU

If you import goods from outside the EU on a temporary basis, you may not need to pay some or all of the import duty and/or VAT. See the section in this guide on VAT on imports of goods and services from non-EU countries.

Goods from outside the EU imported to free zones

Free zones are designated areas where you can store goods from outside the EU without first paying import duties and import VAT. This is because they are treated as if they are outside the customs territory of the EU.

If you supply goods and services to a customer within a free zone, then you should treat them as UK supplies. They will be subject to normal domestic VAT rules. However, there is an Extra Statutory Concession (ESC) that allows goods supplied in a free zone to be zero-rated - but only on condition that the supplier and the customer have agreed that the customer will clear the goods for removal from the free zone, and will pay the import VAT.

This concession is available to all businesses supplying imported goods in UK free zones, regardless of whether the business is established in the UK. However, you cannot use it where the customer is not registered for VAT, and not liable to be registered.

If the goods are from outside the EU, then customs duty and import VAT is due when they are released from the free zone into free circulation. If they are used and consumed within the free zone, then they are considered as released from the zone, so you must put them into free circulation.

More about how you can zero-rate supplies to free zones in VAT Notice 334

Goods from outside the EU stored under customs warehousing

If you import goods from outside the EU and store them under an inventory system known as a customs warehouse, payment of import duties and/or VAT can be suspended. A wide range of goods can be stored in this way.

Goods stored within a customs warehouse are treated as if they were stored outside the UK - so they're usually disregarded from a VAT point of view. Import VAT won't be due until you release the goods from the warehouse into free circulation. You'll normally pay it together with any customs duty due, and the amount of VAT will be based on the import value of the goods.

When you release goods from a customs warehouse, they're subject to the normal VAT valuation rules. You must include any customs and/or excise duty that is due in the value, unless excise duty is going to be suspended because the goods will be placed in a tax warehouse.

Storage charges, and charges for the usual forms of handling carried out on goods under customs warehouse arrangements, can be zero-rated. However, services like brokerage, agent fees and transport between warehouses cannot be zero-rated. Services that are exempt from VAT outside the warehouse are also exempt on the inside.

More about the how you can benefit from customs warehousing in VAT Notice 232

External and internal transit

If you use what's known as community transit, you can move goods within the customs territory of the EU without paying import duties and other charges, including VAT, until they reach their final destination. There are two types of transit procedure - external transit (T1) and internal transit (T2 or T2F).

You must use external transit for movements of:

  • goods from outside the EU which haven't been put into either free circulation or another customs procedure allowing movement within the EU
  • EU goods which have been placed under the common transit procedure and are travelling to or via an EFTA country (Iceland, Liechtenstein, Norway or Switzerland)

You must use internal transit for movements of EU goods when they are:

  • moving from one point in the EU customs territory to another through one or more EFTA countries - but the procedure is not required when goods are being moved by air or sea to or from an EFTA country
  • moving to, from or between the EU's 'special territories' - except when they are moving directly between the UK and the Channel Islands
  • certain types of goods travelling to and from Andorra
  • travelling to and from San Marino

All community transit declarations must now be made electronically via the New Computerised Transit System (NCTS).

Find a list of the special territories of the EC in VAT Notice 502

Find out more about community transit procedures in the European Commission transit manual on the Europa website

More about community transit in VAT Notice 702/9

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