Importing when you are not VAT registered

Importing and VAT registration are two separate decisions

They get tangled together because both involve HMRC and both involve tax, but nothing about bringing goods into the country requires you to be VAT registered. What customs needs is an EORI number, which identifies you when goods move between Great Britain and another country, and a named importer of record on the declaration. Our guide on importing to the UK covers that sequence.

Registration is compulsory in its own right once your total taxable turnover for the last twelve months goes over £90,000, or once you expect it to go over £90,000 in the next thirty days. Below that you may register voluntarily. Those are the rules whether or not you import anything.

So the question is never whether you are allowed to import. It is what the import VAT does to your numbers, and that depends entirely on which side of the registration line you are on.

What actually changes is whether the VAT is a cost

Import VAT is charged on the import either way. A VAT-registered business recovers it, subject to the usual rules about ownership and evidence set out in our VAT on imports guide, and can use postponed accounting so that it never leaves the bank account at all. An unregistered business cannot recover it, so the same charge becomes part of what the goods cost.

That is a large number and it belongs in the landed cost from the first calculation rather than as a surprise at the border. A business modelling its margin on the supplier price plus freight, and discovering the VAT afterwards, has modelled the wrong product. The landed price guide sets out where it sits, and the duty calculator does the arithmetic.

The cash-flow difference is separate from the cost difference and often bites first. A registered business using postponed accounting does not fund the VAT at all; an unregistered one pays it, or its agent pays it and adds a fee, before the goods are released and long before anything is sold.

Voluntary registration is not automatically the answer

The obvious move, once you see the import VAT sitting in your costs, is to register voluntarily and recover it. That is right for some businesses and wrong for others, and which one you are depends on who buys from you rather than on what you import.

If you sell mainly to VAT-registered businesses, registering is usually straightforwardly good: you recover your import VAT, and the VAT you add to your invoices is recovered by your customers, so it does not change what they effectively pay. If you sell mainly to consumers, or to businesses that are not registered, the VAT you add is a real increase in your price or a real reduction in your margin, and it can easily exceed what you recover on the imports.

So the calculation is not the import VAT in isolation. It is the import VAT you would recover set against the output VAT you would have to charge on everything you sell, at your actual mix of customers. That is an accountant's question with your own numbers in it, and we are saying so rather than pointing you at the answer that happens to make importing look cheaper. Registration also brings returns, records and deadlines, which is a real cost in time for a small business.

There is also a threshold consequence worth knowing before you grow into it. The obligation arrives on turnover, not on profit or on imports, so a business with thin margins and high volume reaches it sooner than it expects. Knowing the number in advance is better than discovering it in month eleven.