What is Postponed VAT

Accounting - PVA?

Postponed VAT Accounting - PVA

Introducing Postponed VAT Accounting

On 1 January 2021, the UK Government introduced Postponed VAT Accounting (PVA) as part of their business support measures post-Brexit. Postponed VAT Accounting (PVA) allows a VAT registered UK importer to account for payable import VAT on their VAT return rather than paying it immediately or through their duty deferment account and reclaiming using the HMRC form C79.

Benefits of Postponed VAT Accounting (PVA)

Accounting for import VAT on the VAT Return has significant cash flow benefits for the UK importer. Effectively, the UK importer does not need to pay the import VAT upfront when importing goods into the UK and then reclaim the VAT back later. Postponed VAT Accounting (PVA) allows the UK importer to declare and reclaim the import VAT on their normal VAT return. Therefore, the importer’s VAT liability is neutral as the amount they pay is offset by the amount they reclaim.

Postponed Import VAT Statement (MPIVS) | Access to PVA Statements | Accounting for Postponed Import VAT |

Non-Registered VAT Importers | Customs Import Declarations | What is Import VAT? | Import Blogs & Case Studies

Can PVA be used for imports from all countries?

There have been some misconceptions about Postponed VAT Accounting (PVA) being a post-Brexit solution which only applied to imports from the European Union. This is not the case, PVA can be used for imports into Great Britain from anywhere outside the UK, and imports into Northern Ireland from outside the UK and EU. The use of the PVA scheme is optional. Importers will need to inform their freight forwarders and customs clearance agents that they wish to use PVA and that this will need to be shown on their customs declarations.

Can PVA be used for goods covered by special procedures?

Special Customs Procedures enable the suspension of duty and import VAT while imported goods are stored or being processed. Importers can decide to use Postponed VAT Accounting (PVA) when they submit a declaration removing goods from a special customs procedure (such as inward or outward processing, customs warehousing, etc.) into free circulation. PVA can also be used when excise goods are released for home consumption. This would include goods placed into duty suspense within an excise warehouse since the point of import.

Postponed Import VAT Statement (MPIVS)

Importers who decide to use Postponed VAT Accounting (PVA) will receive a Monthly Postponed Import VAT Statement (MPIVS), which they access via the Customs Declaration Service (CDS) financial dashboard. Importers should use the Monthly Postponed Import VAT Statement (MPIVS) as confirmation of the Import VAT amounts. They should include the Import VAT amounts in box one of their VAT returns and (where appropriate) in box four to be reclaimed as input tax, subject to the normal rules. HM Revenue and Customs (HMRC) encourage importers to download the Monthly Postponed Import VAT statements for their records.

Access to PVA Statements

Importers have access to view their postponed import VAT statements online via the Customs Declaration Service. HM Revenue & Customs (HMRC) will make available each statement covering the total import VAT postponed for the previous month and this is usually available to view after the 8th working day of the following month.

HMRC only provide the statements in a PDF format and importers can only access a statement for 6 months from the date it’s published. HMRC state that importers must download and keep a copy of each statement in their records.

Accounting for Postponed Import VAT

HM Revenue & Customs (HMRC) state that importers must account for postponed import VAT on their VAT return, for the accounting period which covers the date they imported the goods. HMRC state that the importer must provide the following information within the following boxes on their VAT return.

Box 1

Include the VAT due in this period on imports accounted for through postponed VAT accounting. Importers can get this information from their online monthly statement, or they must estimate the amount if they delayed their import declaration and do not have a statement.

Box 4

Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting. Importers must estimate the amount if they have delayed their import declaration and do not have a statement.

Box 7

Include the total value of all imports of goods in this period, not including any VAT.

Non-Registered VAT Importers

HM Revenue and Customs (HMRC) state that importers who are not VAT registered or who, under input tax rules would be unable to treat the import VAT as input tax because they are not the owner of the goods being imported, are NOT permitted to use Postponed VAT Accounting (PVA).

HMRC state that the importer, as a non-UK trader and not registered for UK VAT, can arrange for an agent in the UK to import and supply goods on their behalf. The agent’s supply of services to the importer will be at the standard rate of VAT which they will not be able to reclaim. The agent will be able to recover the import VAT as input tax, if they are an agent acting as principal under Section 47 of the VAT Act.

Customs Import Declarations

Many UK Importers use the services of a UK Customs Clearance Agent to complete and submit their customs declarations on their behalf. HM Revenue and Customs (HMRC) state that the UK importer should have a written agreement with the UK Customs Clearance Agent to confirm how the import VAT will be accounted for.

The decision to use Postponed VAT Accounting (or not) is for the importer to make. This is not a decision for the Customs Clearance Agent, the Courier Company or the Freight Forwarder to make.

What is Import VAT?

Import VAT is a tax levied on an import, on movements of goods into Great Britain from anywhere in the world, or those to Northern Ireland from anywhere outside the EU. Import VAT only becomes due when imported goods are cleared into free circulation within the UK. HM Revenue and Customs (HMRC) state that importers must tell them about goods that they bring into the UK and pay any VAT and duty that is due.

VAT-registered businesses can account for import VAT on their VAT Return by using postponed VAT accounting. Accounting for VAT on their VAT Return in this way allows importers to declare import VAT and reclaim it as input tax on the same VAT Return. Importers can reclaim the VAT incurred on the imported goods they own as input tax subject to the normal rules.

Alternatively, importers can choose to pay import VAT on importation. If importers choose to do this, they can reclaim the VAT incurred on the imported goods they own as input tax subject to the normal rules.

Customs Clearance Blogs & Case Studies

Read my Customs Clearance Blogs and Case Studies to see how I have worked side by side with clients to tackle different import challenges. In each case an appropriate solution was identified and implemented to manage the client's Imports.