UK HMRC Clarifies Tax Deduction for Imported Goods, New Procedures Effective July 15

The United Kingdom’s HM Revenue & Customs issued a policy paper April 11 intended to clarify the claiming of “input tax” value-added tax deductions for imported goods. “HMRC is aware of incorrect treatment by businesses whereby import VAT has been incorrectly deducted as input tax by non-owners of the goods,” the agency said. One situation in which this has presented itself is when businesses sell goods before importing them into the U.K. and pass title on to the new owner, but still act as importer of record and pay the import VAT. “The correct procedure is for the new owner of the goods to be the importer of record and reclaim the import VAT on the [import VAT certificate] C79 and not the previous owner,” HMRC said. Beginning July 15, HMRC will only allow claims for the “input tax” using the correct procedures, it said. As previous guidance was not clear on the correct procedure, HMRC “will not pursue historical VAT deduction where the VAT could have been recovered in full by the owner of the goods at the time of importation as long as there is no risk of duplicated claims,” it said.