Introduction of Postponed Accounting and the impact on VAT Return obligations
A mechanism offering significant VAT cash-flow and logistical benefits to Irish importers was introduced in Ireland with effect from 1 January 2021, referred to as “Postponed VAT Accounting”. Historically, imports into Ireland (i.e., goods obtained from non-EU territories) required that the import VAT (to be accounted for by the business acting as Importer of Record) and duty to be paid at the point of entry.
However, with effect from 1 January 2021, where a C&E and a VAT registration is held, it should be possible to avail of Postponed VAT Accounting, in which case, goods should be released from customs without delay, with the custom declaration indicating Postponed VAT Accounting is applied. Instead, the VAT should be self-accounted for in the periodic VAT return in which the import arises, along with a simultaneous deduction, assuming an entitlement to deduction arises.
Additionally, a new box “PA1” has been introduced by Revenue in the Irish VAT return as and from the January/February 2021. A business availing of postponed VAT accounting must declare the net value which have been subject to postponed VAT accounting at import in this box.
The additional compliance/VAT reporting obligations in respect of Postponed VAT Accounting, has led to some questions from clients specifically how to identifying the value of goods imported by the business into Ireland.
This is particularly relevant where the client is reliant on the customs broker/shipper to provide the required document. This documentation required to evidence deductibility of import VAT is the Single Administrative Document (SAD), also known as Form C88 in the UK and is the customs declaration, submitted to the customs authority on the importation/exportation of goods to/from the EU.
SAD Download Service
To assist taxpayers in quantifying their import liability, Revenue have introduced a SAD download service which is available via Revenue Online Service (“ROS”). This online mechanism should provide clear and easily accessible information to importers indicating the import transactions during the month/period on which the import VAT was postponed by way of Postponed VAT Accounting. It should then be possible for the VAT amounts required to be included in the VAT3 return to be calculated accordingly.
Requesting the Statement
The service is available via ROS to taxpayers holding a valid ROS Certificate and C&E registration. By clicking on the “Revenue Record” section and scrolling down the screen to “Services”, a “Statement of Account” should be available to request. Once “C&E” is selected from the tax type drop down and the correct tax number is selected, the downloadable statement should be available to request.
How is the Statement Issued?
Once the taxpayer has requested to receive the SAD downloadable statement, and confirmation has been received that the request has been successful, the first downloadable report for all customs declarations processed in the current month should automatically issue to the taxpayer’s Revenue mailbox each month on the second weekend of each subsequent month. The statement should continue to be issued in this manner unless the request is cancelled by the taxpayer.
Internal finance teams of businesses importing goods to Ireland should ensure they are familiar with procedures to avail of Postponed VAT Accounting and the relevant declarations and accounting procedures that must be made on the company’s VAT return.
With respect to the SAD Downloadable service, it is important to flag that it not possible to access data prior to the date the downloadable statement service is activated. Accordingly, we strongly recommend that businesses importing goods into Ireland access this system without delay. This service will provide real efficiencies in the VAT return preparation process for importers.
The following link contains the steps to follow to access import history on ROS going forward – this should provide information in respect of all imports into Ireland under an entity’s EU EORI number and therefore addresses imports under both the new AIS system and the old AEP system (despite the link referring to AEP only)