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9th August 2022

Partner Insight: Importers need to Plan Ahead to avoid costly VAT risks

Centurion VAT – an Indirect Tax specialist team that supports importers and exporters across the UK – is warning businesses not to be caught out in the Autumn as HMRC moves its goods declaration system to the Customs Declaration Service (CDS).

 Centurion Director – Andrea Brindley – advises that businesses should ensure they plan ahead and recognise how the system changes will affect the VAT documentation they need to hold to protect their ability to claim back the Import VAT they pay to HMRC as goods enter the UK.

 “In June 2022 HMRC sent a letter to all known exporters and importers,” she advised “but with the pressures that businesses are facing, not least, with staff shortages to implement changes to internal controls, it’s important not to lose focus on the next step change those importers and exporters will face. It could result in a costly VAT bill as well as delay the movements of goods”

Why the concern? Andrea explained “The existing system known as CHIEF (Customs Handling of Import and Export Freight) used by HMRC for declarations is winding down and instead all declarations will be processed using the new system, the Customs Declaration Service (CDS). If you make your own declarations or use an agent, to avoid problems, you need to ensure that you are on track to use the CDS system for all imports after 30 September 2022. “

The implications that this will have on the vital VAT recovery documentation that businesses need to protect their claims for Import VAT, will depend on how that business currently imports, she said.

“If you are a business that continues to physically pay VAT at importation to the UK you will need to access the new CDS system to download your C79 monthly import VAT certificates as they will no longer be sent to you by post each month.  Currently, if your imports are made using both CHIEF and CDS, remember that you need to be looking out for two C79 certificates each month – one will be postal and the other online, in CDS. Staff training to increase the awareness of this change will be important therefore.”

“Businesses lacking the correct evidence to support their recovery of VAT on imports will provide an easy target as HMRC turn their attention to VAT compliance management. We are seeing HMRC staff returning to VAT compliance roles after their reallocation to the COVID Business loans sections” Andrea commented. “This, combined with increased HMRC recruitment into VAT compliance teams, is a timely reminder to the wider business community not to get caught out as the import systems changes happen in the Autumn.”

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