Month: April 2023

Postponement of VAT

Started 1 Jan 2021

Account for VAT on the VAT return rather than pay at Port.

No approval needed to start using it.

When making import declaration, select duty deferment account instead of immediate payment. Usually, businesses use freight forwarders to complete import paperwork, so just need to instruct the freight forwarding company via a simple email to start using VAT postponement.

All VAT deferred will be captured in Monthly postponed import VAT statement (MPIVS).

Businesses typically will have both C79s (from courier companies like UPS etc.) and MPIVS.

To get your C79s and MPIVS use link below:
Get your postponed import VAT statement – GOV.UK (www.gov.uk)

VAT Return

Box 1                    include VAT due on imports as shown on MPIVS

Box 4                    include VAT reclaimed, same figure as Box 1*

So net effect – NIL

Box 7                    include total value of all imports

*Input VAT will be restricted for exempt and partially exempt businesses.

Bonus

  • Import VAT is calculated by adding supplier invoice, freight and custom duty.
  • In Sage use T18 code when positing invoices where postponement used.

Why should I pay taxes?

Besides paying penalties, interest, criminal prosecution and reputational damage, I have listed a few reasons for paying taxes in full and on time:

The usual ones are:

1. Taxes fund public services like roads, NHS, schools, transport systems etc.

2. Keeps us safe by funding police, justice system and armed forces.

3. Safety net – helps people in case of job loss, sickness and old age.

4. Directs behaviour – like high taxes on cigarettes, alcohol and fuel duty.

5. Helps target resources towards disadvantaged areas by tax incentives.

6. Wealth distribution – transferring wealth from the wealthy to the needy. Prime example is inheritance tax, this ensures wealth is not perpetuated through generations and creates a more equal society.

Basically price of living in a civilized society. Reason a person is successful is the support system a civilized society provides them.

Now some novel ones, equally relevant:

7. Basis of fiat money – one of the main reasons of value of fiat money is that government accepts it for paying taxes. Fiat money enables the government to control the economy. To read more on the topic of fiat money go to Section 3 `The Return to the Gold Standard` of Essays in Persuasion by John Maynard Keynes, one of the most influential economists of 20th century.

8. Paying a fair share of taxes gives the taxpayer the moral authority to question lawmakers.

9. Basis of democracy. In historic times in England when kings wished to raise funds for their wars; they needed to call in Parliament to raise taxes. Parliament (especially the Commons) developed over the centuries giving universal franchise. This today gives us the right to chose who governs us and how.

But it is a social contract. People pay their taxes and governments govern them prudentially.

Often when governments become corrupt people are disinclined to pay taxes.

Thus, taxes keep peace and harmony and help create a better society.