Accounting for Import VAT when using Cash Accounting



I recently asked a question regarding which tax code to use in order to account for import VAT which was very promptly answered. However.....we are using the VAT Cash Accounting Scheme and HMRC say we cannot use this scheme to report VAT and must treat it in 'the normal manner'. So, what entries do I need to make in order to ensure that I am accounting for the VAT on my return? For context, the majority of items come from outside of the EU and no VAT is detailed on the invoices. Very occasionally the items will be shipped via the EU even though our customer is outside the EU and we will either have the VAT deferred or will pay upfront depending on which courier method our supplier uses. Any help would be very much appreciated. I have asked HMRC for guidance but to no avail..

Parents Reply
  • 0 in reply to SAMANTHA HUTCHINS
    verified answer

    Hi Samantha,

    From what you've described so far, I think you'll be working with notional VAT, typically Tax Codes T21 and T26. These tax codes affect the VAT Return as if you were using Invoice Accounting not Cash Accounting so they'll affect your VAT Return as HMRC require. If you want to test this, I would take a backup of your data. Then post the transactions and run a VAT Return to check, you can then remove these test transactions by restoring a backup.