Flat rate VAT on goods bought from China
Under the UK VAT Flat Rate Scheme, import VAT on ordinary stock is normally unrecoverable. Postponed accounting changes payment timing, not entitlement to reclaim. Ask your accountant to check return entries and whether equipment qualifies for the capital goods exception. Discuss the purchase documents with Cambridge China Bridge.
Check the scheme before costing your order
The Flat Rate Scheme normally prevents recovery of import VAT. Our import VAT guide explains the ordinary recovery position; a buyer using the Flat Rate Scheme needs this additional check before assuming that VAT will come back.
Ask your accountant to compare the scheme with normal VAT accounting using your expected sales, imported stock and other purchases. Include unrecoverable import VAT in your buying budget. Use the landed price guide to organise the cost information, then agree the tax treatment before approving the order.
Postponed accounting does not create a reclaim
Postponed accounting can move payment from the border to the VAT return, but it does not override the Flat Rate Scheme restriction. Your accountant should exclude these imports from flat rate turnover and add the import VAT due to box 1 after the scheme calculation. Do not automatically mirror it as a reclaim.
Give your accountant the monthly postponed import VAT statements and the customs entries. Ask them to reconcile the shipment and check the software treatment. For questions about the named importer and recovery evidence in delivered orders, read our DDP import VAT guide.
Separate business equipment from stock
A single purchase of qualifying capital expenditure goods costing £2,000 or more including VAT can qualify for recovery. Ask your accountant to confirm that the purchase meets the definition and the normal recovery conditions. An expensive stock order does not become qualifying equipment because of its value.
The exception excludes goods bought for resale or incorporation into goods for onward supply. Services do not qualify. Give your accountant an itemised order showing equipment, stock and service charges separately, and ask whether it is genuinely a single qualifying purchase rather than separate purchases grouped for payment.
Agree the evidence and return treatment
Before shipping, send your accountant the supplier invoice, purchase specification, intended use, customs arrangements and proposed VAT payment method. Ask for a written conclusion covering the qualifying purchase value, any recoverable VAT and the supporting documents. Keep that conclusion with the shipment file.
Ask separately whether the asset falls within the Capital Goods Scheme, which excludes goods from this exception. For an approved capital expenditure goods reclaim, the input tax goes in box 4. Keep a record of the reclaim: a later sale requires VAT at the appropriate sale rate outside the flat rate calculation.
Frequently asked questions
Can I reclaim import VAT on flat rate VAT?
Normally no for imported stock. A single qualifying capital expenditure goods purchase costing £2,000 or more including VAT may qualify. Ask your accountant to check the purchase and recovery conditions.
Can I use postponed VAT accounting on flat rate VAT?
Yes, but postponing payment does not create a reclaim. Deal with these imports outside flat rate turnover and add the import VAT due to box 1 after the scheme calculation.
Does a large stock order qualify as a capital asset?
No. Goods bought for resale or incorporation into goods for onward supply are excluded from the capital expenditure goods exception, regardless of the order value.
What should my accountant check before I buy machinery?
Ask them to check intended use, whether it is a single qualifying goods purchase, the VAT-inclusive value, recovery evidence, return entries and whether the Capital Goods Scheme applies.