Postponed VAT, Import VAT And The C79 Form

I have had a few queries recently about postponed VAT and the C79 form from the HMRC. The thing to remember is that postponed VAT is not compulsory and you need to opt-in for your importers to use the system ...

If you need to know what postponed VAT is then take a look at these blog posts. If you don't let them know you want to operate using postponed VAT then you will still be charged VAT by the importer. When an importer charges you import VAT, they then report this to the HMRC and you will receive a C79 form, some weeks later, which then gives you the right to reclaim the VAT from the HMRC.

When you are doing bookkeeping day-to-day though it can be confusing what to enter in your accounts when you get the importers invoice and what to enter when you receive the C79. Here is my advice!

To keep track of what you have paid, it is far easier to enter into your accounts the VAT to be reclaimed when you pay the importer so your bank can be up-to-date and your profit and loss is correct (see this post on how to enter VAT only invoices). As most small businesses pay VAT quarterly and you get over 30 days to submit your VAT, in my experience the C79 would usually arrive way before I actually submit the VAT.

When the C79 arrives I would double-check it matched what I entered in my accounts and I would file the paperwork with my importer's invoice. There is no need to make additional entries with this method when the C79 arrives.

Other bookkeepers will enter the VAT paid into a holding account when they get the importer's invoice, then do a journal entry when they receive the C79. This is fine if you are an experienced bookkeeper, but it is easy to mess up the journals.

"And not get the VAT in the correct boxes of your VAT return!"

If this is still making your head spin and you want to make sure you are doing everything right in your bookkeeping, do get in touch and we can have a handholding session and go through the relevant parts you need to know for your company going forward.

If anything I've written here resonates with you, call me on 01604 420057 and let's see how we can help you.