Import of wine from Italy

[anilkumar9]

I receively a small shipment of wine from Italy via a courier service.

The courier paid the duty on importation and billed me. I have to pay the VAT. The wine has not been resold by me yet.
Do I declare the VAT amount as INPUT tax ? as I have not sold any wine ( therefore no VAT received) , the output tax is Zero ? Do I send the VAT amount to HMRC?
Thank you

[Trevor S]

The same principles apply as if you’d bought from a supplier in the UK. The only difference is that when you buy from a UK supplier, they charge you the VAT and they pay it to HMRC – whereas with the import it’s the courier that has paid it to HMRC, on your behalf.

So, if the purchase is by a VAT registered business to be used for their taxable business activities (e.g. resale), the VAT is recoverable via the VAT return.  It doesn’t matter if you don’t actually sell the wine until the next VAT period.  You’ll declare VAT on the income on the VAT return covering the period of the sale.

Bear in mind that this just applies to the VAT.  The charge from the courier is also likely to include a fee / admin charge for dealing with HMRC on your behalf, which of course can’t be reclaimed.

[anilkumar9]

Thank you Trevor S,
The Courier company sent me a bill for the duty + their other charges but NOT for the VAT , which would imply they did NOT pay the VAT on my behalf and expect me to declare it in my VAT return as INPUT VAT value ? I am still not clear whether I owe the amont to the Revenue ? Thank you

[Trevor S]

The only possibility I can think of is that whoever completed the customs documentation selected the “Postponed Import VAT Accounting” (PIVA) option – either without checking with you first, or at least without explaining the implications clearly. Otherwise (without having “duty deferment” arrangements in place with HMRC) either import VAT would have been paid by someone, or your wine wouldn’t have been released!

HMRC’s PIVA guidance is here:
https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return. Essentially it allows goods to pass through customs without import VAT being charged, although duties are still charged at the border, which ties in with the paperwork you’ve received.

Monthly PIVA statements can then be downloaded from HMRC via the Government Gateway showing how much VAT should be paid (by including it in box 1 of the VAT return) and reclaimed (by including it in box 4). Assuming that you’re not already set up to be able to download these statements, you’ll need to follow these instructions: https://www.gov.uk/guidance/get-your-postponed-import-vat-statement

Ultimately (assuming that the wine is for taxable business use) you don’t actually owe HMRC anything, because you would be able to reclaim the VAT on the same return that you pay it on.  But the figures from the PIVA statement should still be included in boxes 1 and 4.

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