Import VAT is incurred on the importation of most goods into the UK and if the business importing the goods is registered for VAT, it can usually reclaim the Import VAT as input tax on their VAT returns.

Section 8.2 of HMRC’s VAT Notice 702 ‘Imports’ advises that to claim this Import VAT a business needs to hold official evidence of VAT paid on imported goods and that official evidence is normally the form C79; a monthly form automatically generated and issued by Customs to the VAT registered importer of goods detailing the Import VAT charged to them.

However, if the business is not registered for VAT at the time they import goods, they will still incur Import VAT but no C79 will be generated.

So, can that business claim the Import VAT it incurred prior to VAT registration when they register for VAT?

The answer to this is, theoretically, yes.

Subject to certain conditions Regulation 111 of the VAT Regulations 1995 allows the recovery of VAT, including Import VAT, incurred prior to VAT registration but this VAT must be supported by “invoices and other evidence”; the same standard of evidence ordinarily required to support regular input tax recovery.

Clearly no C79 will be held by the business for these imports as none would have been generated and issued by Customs but the use of the word “normal” in terms of evidence in section 8.2 of VAT Notice 702 pre-supposes the possibility to support Import VAT recovery using ‘alternative evidence’ where a C79 is not available, in the same way as it is possible to support input tax recovery using ‘alternative evidence’ in the absence of an invoice.

HMRC’s guidance on how they should apply their discretion to accepting alternative evidence is contained in their online guidance at VIT31200 and this suggests that they should take into account all evidence held including supplementary background information.

What can be taken from this guidance is that in order to stand a chance of being acceptable the evidence held must satisfactorily prove to HMRC these fundamental facts:

  • There was a supply of goods made to the business that is claiming the VAT.
  • That VAT was correctly charged on the supply or that Import VAT was charged at the time of import.
  • That the business claiming the VAT paid for the supply and any VAT, of Import VAT, charged to them.
  • That the goods or imported goods were purchased or imported for a taxable business purpose?

But, at the end of the day, it is at HMRC’s discretion whether to acceptance alternative evidence to support VAT recovery.

If they do accept the alternative evidence then Import VAT incurred prior to VAT registration can be claimed, subject to the rules of Regulation 111.

If HMRC do not accept the alternative evidence the decision can be appealed to Tribunal but the Tribunal only has a supervisory role in this matter, so may only consider the reasonableness of HMRC’s decision.


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