Possession, or management of goods on behalf of others will no longer be seen as grounds for a claim, only full legal title.
HMRC have announced a significant change in the way rules are implemented. With effect from July 15th 2019, an importer will not be allowed to recover VAT paid at import, unless they own the goods concerned.
This is regardless of them being the importer of record, holding relevant customs documentation, or using the goods for a clear business purpose.
Toll operators have been an HMRC concern for a while and will be affected, although the same could apply to a range of service providers. Manufacturers who import, modify and re-export may also have an issue.
Whilst in the current situation, the above will not apply to imports from the EU, this could change with Brexit on the horizon.
Change Or No Change
HMRC introduced the amended view via Customs Brief 2 (2019) which explains how the law should always have applied. In essence, that legal title to goods is the only basis for being able to reclaim import VAT.
So there is no change as such, although HMRC acknowledge their guidance was not clear. Entire business models have been built on the previously understood basis, in general without any intention to wrongly claim.
Whilst those models may need to be altered, unless there was no entitlement to a claim, or there has been a double claim, historic cases will not be pursued.
There is no government revenue benefit in the amended regime, nor assistance for business. For some, admin levels and cashflow will be impacted. Neither will title having passed to a different UK company help, they would have to claim.
Being able to set aside thoughts on previous claims is at least a help and as always, business will adapt. For a proportion of specialist providers, time spent gaining advice on business structure may be useful.
In terms of wider application, the team at Dynamic International will keep our clients informed and assist in any way we can.