Since the UK has now officially left the EU, the Brexit transition period is coming to an end. With this, there are many new rules for businesses and citizens, which will come into fruition at the start of the new year.
On 1st January 2021, the United Kingdom will run a full external border, which means that controls will be placed on the movement of goods between Great Britain (GB) and the EU.
With this, the current law regarding VAT on imported goods is going to be changing. Because of this, the UK government will be reintroducing Postponed Accounting to help business with these changes.
The Introduction of Postponed VAT Accounting
Postponed VAT Accounting (PVA) will be introduced for all imports of goods, meaning that importers do not pay import VAT when the goods arrive at a UK port or airport: it is deferred.
This reinstated PVA will help to mitigate cash flow concerns for businesses that import goods, in which this should diminish the current system of waiting up to three months to claim input tax and cash flow issues of paying VAT.
How Will Postponed VAT Accounting Affect Businesses
When PVA is in use, the import VAT will now (for the first time) be accounted for on the VAT Return and will not be handled/paid separately at the point the goods are imported into the UK.
Utilising PVA will:
- Allow VAT registered traders to account for import VAT on their VAT return for goods imported from anywhere in the world (both non-EU and EU countries)
- Maintain the current cash flow position for goods imported from the EU (currently acquisitions)
- Provide a cash flow benefit for traders importing goods from non-EU countries who currently must pay import VAT at (or soon after crossing) the UK border.
If your business is registered for VAT in the UK, you will be able to account for import VAT on you VAT Returns for goods you import. From 1st January 2021 to 30th June 2021, there are some instances where the use of PVA is mandatory. For traders who import standard (non-controlled) goods from the EU to GB can:
- Use existing customs process to complete a standard customs declaration at the point of entry to the GB; or
- Use Simplified Declaration Procedures (if authorised to do so); or
- Use Deferred Declarations.
Alongside this, PVA can be used for excise goods when they are released for home consumption. This includes when goods are released from an excise warehouse after being in duty suspense since the point of entry.
For more guidance on accounting for import VAT on your VAT Return, visit the UK Government website.
In this tutorial video provided by Pegasus Opera, the changes to Opera 3 are explained in detail, as well as providing an insight into how the system will now look. Continue reading below as we go explain the 5 main changes that you will notice to your Opera 3 system.
Postponed VAT Accounting for Opera 3
With the above in mind, Pegasus Opera’s VAT Return Adjustments capabilities have been extended to meet the necessary requirements to adjust the VAT return for Opera 3.
The Pegasus Opera 3 release 2.80.00 is designed to accommodate our Opera 3 users, ensuring that they can continue to use the same kind of VAT codes as they currently use at present. Then, by using Opera’s existing VAT Return Adjustment facility, users can adjust any import VAT related figures on the VAT Return as required.
Estimating VAT Figures
With the introduction of postponed VAT accounting into the system, Opera 3 users at times will have to estimate the import VAT related figures on the VAT Return, and hence amend those figures by use of VAT adjustments. Then, businesses can proceed as needed once they have received their online statement from HMRC, again, by use of VAT adjustments.
New VAT Codes
Another accommodating feature is that Opera users can also create new VAT codes specifically for PVA import and exports. This is to help our Opera users with reporting on those VAT codes, if desired. However, Opera 3 will still enforce the current restrictions/capability of VAT codes based on existing EU and non-EU rules.
The use of various VAT reports will help users in the reconciliations of the estimated and actual figures for import VAT for a specific VAT period.
Users vs Non-Users of Opera EC VAT Module
Now, the VAT adjustments required relating to import VAT will vary, depending on whether you are using the Opera EC VAT module or not.
For our customers that are using the EC VAT module, and purchases from the EU are entered into your Opera 3, the VAT Return will still be updated with values specific to the EU. Because of this, the associated VAT adjustments required for postponed VAT accounting will also need to undo the VAT Return boxes specific to the EU purchases.
If you are not using the Pegasus Opera EC VAT modules, then the VAT adjustments will still be needed for postponed VAT accounting imports.
5 Changes to Opera 3 to accommodate PVA
To make sure that businesses in the new year can utilities postponed VAT accounting with their existing systems, Pegasus Opera 3 has introduced the following changes for its users.
In order for business to move goods between the UK and the EU from 1st January 2021, businesses must obtain an Economic Operators Registration Identification number (EORI) from HMRC.
With this, the Opera 3 Company Profiles form has been enhanced to include the EORI field so that your business can record your EORI. Hence, this information can be included on various reports and documentation etc. produced by Opera 3, when/if required for your business.
The Opera VAT Code maintenance form has been enhanced to allow our Pegasus Opera users to specific whether a ‘J type’ VAT code specifically relates to PVA adjustments or not. Consequently, this flag will then allow for PVA specific VAT report filtering.
Prior to the changes, the VAT adjustments could only be posted from the Making Tax Digital (MTD) VAT Centre within Opera 3. However, changes have been made to make those ‘J type’ VAT adjustments available for use, regardless of whether MTD is in use or not.
EC VAT Reports
For our Opera customers that use the EC VAT module, when continuing to use your existing VAT codes for EU purchases when PVA in introduced, the postings within Opera will still calculate and record acquisition tax on the VAT Return.
The EC VAT module’s VAT Reconciliation report will have its Excel report variant extended to also include each transaction’s value of acquisition tax. This helps to make it easier to see how much acquisition tax is recorded against the VAT transactions that make up the figures on the VAT Return.
The various ‘detailed’ VAT reports have had their UI selection criteria enhanced, allowing for reporting on just PVA related VAT adjustments. This will aid our Pegasus Opera users in reconciling estimated and actual figures from import VAT.
Moreover, Pegasus Opera have also taken this opportunity to include a VAT transaction’s acquisition tax value in the Excel variation of the Detailed VAT Values report. This will feature as a new separate column within the Excel report.
The update to support postponed VAT accounting in Opera 3 is one of three major releases this November.
Scheduler (2.20.50) Making Tax Digital Release
On top of Pegasus’ update of Opera 3, they have also released Scheduler 2.20.50 in November. This release includes refinements to the Making Tax Digital (MTD) Fraud Prevention Headers following feedback from HMRC.
Therefore, all of our Pegasus users who are mandated for MTD should apply these changes at their earliest opportunity to remain compliant.
The consequences of not applying this update may lead to your VAT return failing submission in the future, especially once HMRC apply the full validation process to MTD Fraud Prevention Headers.
For any of our Opera 3 SQL SE users, the client DLL has been updated as well.
Pegasus Web Xchange (2.20.00) Release
Last but not least, the Pegasus Web Xchange (PWX) version 2.20.00 has been released. This updated version focuses mainly around technological and functional upgrades, designed to support large Payroll datasets.
As such, both the data extraction and upload routines have been completely rewritten to allow data to be uploaded to Pegasus Web Xchange in batches. The impact of these changes will allow for you to see significant performance improvements, particularly in the upload process and in large datasets.
The additional functional improvements include:
- Settings webpage: This webpage has been enhanced to allow your users to set the batch size in terms of the number of employee records to be uploaded in a batch. Also, Pegasus have included an option to determine whether all PSS payslips will be uploaded during a resynchronisation event.
- Service History webpage: This webpage has been enhanced to now include two new options to allow the content of the event grid to be filtered. Option one will allow Timesheets workflow events to be filtered out of the event grid, whereas option two will allow Windows events to be filtered out.
- Event Detail webpage: This webpage has also been enhanced such that, where data has been uploaded in more than one batch, an Event Breakdown tab will be displayed. When selected, this will display a new Event Breakdown webpage.
The Event Breakdown webpage, or webpages if there are more than 25 batches, will provide a summary of the content of each batch. On top of this, it will allow you to drill-down into each batch and display details of the batch status. This will be most useful where a batch has failed to upload or generated an upload warning).
Overview of Pegasus Opera Updates
To summarise, the latest release from Pegasus focuses on Opera 3 (2.80.00), Pegasus Web Xchange (2.20.00) and Scheduler (2.20.50). These updates include functional improvements to support Postponed VAT Accounting, updates for Making Tax Digital – Fraud Prevention Headers, as well as a technological and functional uplift to PWX. They implemented some other general maintenance for Opera 3 within this release, which mainly revolved around technical issues and bugs.
Contact Synergy Technology
Did you know that Synergy Technology is one of the UK’s leading providers of Pegasus accounting, payroll and business software solutions? If you need a flexible and customisable system, with Opera support provided by professionals, then get in touch with our team for help.