HMRC (the UK tax authority) has clarified that the owner of goods should be the importer of record and entitled to reclaim the import VAT on imported goods. Under the updated guidance, it is made clear that where title to the goods has not yet passed from an overseas business to the UK customer, the overseas business should bear the import VAT on goods arriving into the UK. The VAT can then be reclaimed under the EU 13th Directive if the overseas business is not registered for VAT in the UK. Where the title of goods passes before the goods are imported, it is the new owner who should act as the importer of record and reclaim the import VAT.

HMRC has advised that it will not pursue historical VAT claims provided that the VAT was genuinely deducted in error, the owner of the goods would have been entitled to recover the full import VAT and no other person has deducted the VAT.

DLA Piper Comment: This clarifies the law. It has always been a trap that businesses (sometimes freight agents) incur the import VAT and have the C79 import document addressed to them, but cannot reclaim the VAT as they make no supplies of the goods in the UK.