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Import VAT and duty

If you purchase goods from a country outside the EU, you may need to pay import VAT and duty. This usually applies if the goods you purchased are subject to VAT in this country. The courier normally supplies you with a separate invoice showing how much import VAT and duty is due. If you’re registered for VAT, you can usually reclaim the VAT element of the invoice from HMRC.

You can’t reclaim the VAT element until you’ve received the Import VAT Certificate (form C79). If you’re not sure whether you can reclaim VAT, you should check with your local tax office.

Before you record the invoice for import VAT and duty, you should create a separate nominal ledger account for this purpose and also a supplier record for the courier.

To create the import VAT and duty nominal ledger account

  • 1. Go to Settings, and in the Financial Settings section click Chart of Accounts.
  • 2. Click New Ledger Account and complete the following information:
Included in Chart Leave this selected.
Ledger Name* Enter a name for the account. For example, Import VAT and duty.
Display Name* Enter the display name. For example, Import VAT and duty.
Nominal Code* Enter a nominal code. For example, 5101.
Category * Choose Direct Expenses.
VAT Rate Choose the required VAT rate.


Import VAT is generally charged on duty at the same rate as the item you’re importing. If you normally import items at different rates, you can leave this clear. If you do choose a rate, you can still change this when you enter your invoice.
Visibility Leave the defaults selected.

If you want to, you can use a different nominal code as the category that determines where the values appear on your reports.

  • 3. Click Save.

To create a supplier account

  • 1. Go to Contacts and from the drop-down list click Suppliers. Click New Supplier.
  • 2. Enter the business name and a reference.
  • 3. Enter the relevant information.
  • 4. Select the Supplier is an import agent check box.
  • 5. Click Save.

By marking the supplier as an import agent, you will be able to correctly record invoices for VAT and Duty, even if the supplier is based overseas.

You can’t record Quick Entry or Other Payment transactions for suppliers marked as Import Agents.

To record the import VAT and duty – C79 received

When recording the import VAT and duty you should record the goods you received separately against the relevant supplier account, using the zero-rated VAT rate.

In the following example, you receive an invoice from the courier where the import VAT is £100. The invoice also includes duty at £100 plus VAT at the standard rate of £20.

  • 1. Go to Purchases and from the drop-down list click Purchase Invoices. Click New Invoice.
  • 2. In the Supplier field select the name of the courier or Add a supplier. Enter the date of the invoice, the invoice due date, and any references as required.
  • 3. Enter the relevant information to record the import VAT and duty on separate item lines. For example:
Description * Ledger Account* Qty/Hrs * Unit Price* VAT Rate* VAT Amount* Total
Import VAT Import VAT and duty (5101) 1 0.00 Standard 100 100
Import duty Import VAT and duty (5101) 1 100 Standard 20 120

We’ve used standard rate as an example. If you’re not sure which rate to use, you should check with your local tax office.

  • 4. Click Save.

You’ve successfully recorded the import VAT and duty. When you create your next VAT Return, the VAT element is included with the purchase VAT you can reclaim in Box 4.

To record the import VAT and duty – C79 not received

These steps explain how to account for the import VAT and duty charged by the courier until you receive form C79 and can reclaim the VAT.

You should record the goods you received separately against the relevant supplier account, using the zero-rated VAT rate.

In the following example, you receive an invoice from the courier where the import VAT is £100. The invoice also includes duty at £100 plus VAT at the standard rate of £20. When you record the quick entry invoice, you need to show the net and VAT elements separately. This ensures the net value appears on your return, but the VAT element doesn’t. When you’re ready to reclaim the VAT, you can do this using journals.

Generally, VAT is charged on duty at the same rate as the item being imported. However, if you’re not sure which rate to choose, you should contact your local tax office.

You should create a supplier account for the courier, for details please refer to section To create a supplier account . You should also create a new nominal ledger holding account to record the VAT amount, until you can reclaim it.

To create the Import and Duty VAT holding account.

  • 1. Go to Settings. In the Financial Settings section click on Chart of Accounts.
  • 2. Click New Ledger Account and complete the following information:
Included in Chart Leave this selected.
Ledger Name* Enter a name for the account. For example, Import & Duty VAT holding account.
Display Name* Enter the display name. For example, Import & Duty VAT holding account.
Nominal Code* Enter a nominal code. For example, 9997.
Category * Choose Overheads.
VAT Rate Choose No VAT.
Visibility Leave the defaults selected.
  • 3. Click Save.

To record the invoice

  • 1. Go to Purchases and from the drop-down list click Purchase Invoices. Click New Invoice.
  • 2. In the Supplier field select the name of the courier or Add a supplier. Enter the date of the invoice, the invoice due date, and any references as required.
  • 3. Enter the relevant information to record the import VAT and duty on separate item lines. For example:
Ledger Account * Details Net VAT Rate VAT Total
Import VAT and duty (5101) Import Duty 100.00 Zero Rated 0.00 100.00
Import & Duty VAT holding account (9997) Import Duty 20.00 No VAT 0.00 20.00
Import & Duty VAT holding account (9997) Import VAT 100.00 No VAT 0.00 100.00
  • 4. Click Save.

To reclaim the VAT once you receive form C79

  • 1. Go to Journals and click New Journal.
  • 2. Enter the reference, date, and a description if required.
  • 3. Enter the information required to record the journal, for example:
Ledger Account* Details * Debit Credit Include on VAT Return?
VAT on Purchases (2201) Import VAT 100.00 Select this check box
VAT on Purchases (2201) Import Duty VAT 20.00 Select this check box
Import VAT holding account (9997) Import VAT adjustment 120.00 Leave this clear
  • 4. Click Save.

You’ve successfully recorded the VAT you can reclaim and when you create your next VAT Return, it’s included in Box 4.

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