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Deferred VAT accounting on removal from "In Bond"

Hi. I’m after a bit of correct accounting advice to clear my spinning brain

I have some wine being held In Bond. Once it gets sold Duty Paid, then I am liable for both Import Duty and deferred VAT.

The deferred VAT and duty gets paid directly by my bond warehouse, who then release the goods once I have paid them.

Do I need to treat this in any special way when accounting for it - or do I simply enter in a purchase from my bond warehouse for the correct amount including VAT payment.

The reason I am confusing myself is that I’m not sure if I am actually paying the warehouse or HMRC.

Thank you in advance


I worked in the freight industry and we accounted for bond releases as follows:-
The invoice for the Import VAT & Duty was treated as a normal Purchase Invoice.
A separate nominal code was created in the Direct Costs section for Import Duty, the VAT was coded as normal to Input VAT in order to reclaim it on your VAT return.
Not sure how QuickFile would handle it.
Maybe Goods £1,000 plus vat @ 20%
Then an extra line Goods MINUS £1,000 @ 0%

Thank you very much for your reply. I have indeed entered the Goods Minus method you describe.

An example of what I am struggling with, as a non accountant. Say

  • I take some goods out of bond with a deferred VAT charge of £1000
  • My warehouse pays HMRC £1000 on my behalf
  • I create a purchase order as you describe above, which shows me paying £1000 VAT to the warehouse.
  • I assume I can at that stage claim back that £1000 from HMRC?

Now I type it out it seems to make sense, but I would be very grateful if someone could confirm I’m doing the right thing.

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