Roseline Logistics Ltd (Roseline) acted as a Customs agent for QP Trading Limited (QPTL) and made 32 import declarations between January and May 2022. Roseline claimed postponed VAT accounting (PVA) on QPTL's behalf in each declaration. PVA allows a VAT-registered trader to account for import VAT in its VAT return instead of paying it at the point of import. However, QPTL was not entitled to use PVA because it wasn't UK VAT registered at the time.
HMRC issued a post-clearance demand note for GBP1.1m to Roseline, arguing that Roseline should have known QPTL was ineligible for PVA. Only VAT-registered importers can opt for PVA, and QPTL's VAT registration was cancelled. HMRC held Roseline jointly and severally liable for the VAT due from QPTL under section 6(3)(b) or under alternatively 6(3)(d) of the Taxation (Cross-border Trade) Act 2018 (TCTA).
The FTT found Roseline was not a valid Customs agent for QPTL due to lack of proper authorization and thus not liable under sections 6(3)(b) and 21(6)(c) of the TCTA. However, Roseline was held jointly and severally liable under section 6(3)(d) (as a person involved in a breach of a relevant Customs obligation) for the unpaid import VAT due to invalid PVA claims.
FTT emphasized the importance of proper authorization and compliance with Customs regulations.
Key takeaway
In the current geopolitical climate, with heightened attention on cross-border trade and tariffs, it's crucial for customers to thoroughly verify customs agents' authorization and handling of imports. Additionally, customs agents must diligently check their clients' VAT registration status and eligibility for VAT accounting methods to prevent unexpected tax costs.
Reference
[View source.]
