I have had a few queries recently about postponed VAT and the C79 form from 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 ...
When the C79 form arrives I would double-check that the import VAT matches!
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 HMRC and you will receive a C79 form, some weeks later, which then gives you the right to reclaim the VAT from 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.
Until next time ...
ALISON MEAD
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01604 217365 and let's see how I can help you.
Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.
She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.
Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.
You know what they say: if you want something done well ask a busy person!
No unauthorised use, duplication, distribution or modification to any original content contained within this blog is permitted without prior written permission of the author. All other trademarks and registered names are acknowledged.
