Postponed VAT Accounting and Import VAT

Ian Simmonds • Sep 09, 2020

Import VAT: Postponed VAT Accounting

Import VAT: Postponed VAT Accounting

The Government announced, during the Budget, that on 1 January 2021 Postponed VAT Accounting (PVA) will be introduced on imports. Currently, imported goods from a non-EU country are liable for payment of import VAT at the same time as customs duty. However, importers can defer to the fifteenth of the following month the payment of the customs duty and import VAT by using a duty deferment account (if available to them).

The Government have stated:

The introduction of PVA will enable importers to account for and recover import VAT as input tax on the same periodic (usually quarterly) VAT return, rather than having to pay it upfront and recover it on a subsequent return using the C79 VAT certificate as evidence of entitlement.

These changes will not affect non-VAT registered importers and individuals who must continue to pay (or defer) import VAT on imported goods at the same time as the customs duty, as they do now.

The process will provide importers with a new cashflow benefit, as they will be able to postpone VAT at the time of import, as opposed to paying it immediately upon importation. Importing businesses should note that this new process does not only cover goods arriving from non-EU countries, but also goods coming from the EU after the 1 January 2021.

How will the PVA work?

The Government have stated:

All UK VAT registered Importers will be eligible to use PVA; no authorisation will be required. They will simply make the appropriate entry and provide their EORI and/or VAT registration number (VRN) on their customs declaration. This process (subject to customs clearance) will allow the goods to enter into free circulation without up-front payment of the import VAT. The customs declaration will generate an online Monthly Postponed Import VAT Statement (MPIVS) that will be the evidence required to account for and recover the import VAT as input tax on their next VAT return. (Note: The C79 will continue to be produced for those entries where any VAT is paid on importation).

Will there be a staged approach?

There will be a staged approach from 1 January 2021 until 30 June 2021. The Government have stated:

UK VAT registered Importers who import standard (non-controlled) goods into GB from the EU and who make an Entry in Declarants Records (EIDR) under the staged approach to import controls will be required to use PVA to account for the import VAT on those goods. Making the EIDR allows the VAT registered importer to defer submission of their supplementary declaration by up to 6 months from the point of import, and they will be required to use PVA irrespective of when they submit their supplementary declaration.

Where the importer does defer their supplementary declaration, they will not have an MPIVS when they complete their VAT return. They will therefore need to use the information on their EIDR or other commercial import records to estimate the amount of import VAT due and account for that tax on the VAT return relating to the month of import. (For example; the import VAT on goods imported in January 2021 will be accounted for on the VAT return that covers January 2021).

When the deferred declaration is subsequently submitted the actual amount of import VAT will be calculated and tax due to be accounted for will be recorded on the MPIVS for the month the declaration is submitted. This should be compared to the estimated amount and any adjustments required should be made on the next VAT return.

If you would like more details, please call +44 (0) 118 932 8447 or email info@icsglobalservices.co.uk

ICS Global Services Limited

< Older Post Newer Post >