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Last updated: 4 Mar 2021
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Brexit: Postponed accounting for import VAT from 1 January 2021

VAT registered businesses can opt to pay import VAT due on EU and non-EU goods via their VAT returns from 1 January 2021.
What is postponed VAT accounting?

Postponed VAT accounting (PVA) means that the importer does not pay import VAT when the goods arrive at the UK port or airport: instead it is deferred. The importer indicates on the import declaration that PVA will be used and the goods can be released without payment of the import VAT. 

 

What is postponed VAT accounting? 

From 1 January 2021, VAT is payable on most imports coming into the UK from anywhere in the world, and this will now include imports from the EU. The PVA system aims to avoid the negative cash flow impact on businesses of having to pay VAT at the port of entry and will avoid having goods held in customs ports until the VAT is paid. For consignments of goods of a value over £135, rather than physically paying import VAT and then reclaiming it on a subsequent VAT return, the VAT is accounted for as input and output VAT on the same return. 

For consignments of goods not exceeding £135 in value, which are sold business to business (B2B), where the VAT registered business customer provides its VAT registration number to the seller, the business customer will then be responsible for accounting for any UK VAT due on their VAT return. This will use a ‘reverse charge’ procedure if the goods are supplied to Great Britain, or via PVA if the goods are supplied to Northern Ireland. 

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Linda Skilbeck

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Postponed VAT accounting (PVA) means that the importer does not pay import VAT when the goods arrive at the UK port or airport: instead it is deferred. The importer indicates on the import declaration that PVA will be used and the goods can be released without payment of the import VAT. 

 

What is postponed VAT accounting? 

From 1 January 2021, VAT is payable on most imports coming into the UK from anywhere in the world, and this will now include imports from the EU. The PVA system aims to avoid the negative cash flow impact on businesses of having to pay VAT at the port of entry and will avoid having goods held in customs ports until the VAT is paid. For consignments of goods of a value over £135, rather than physically paying import VAT and then reclaiming it on a subsequent VAT return, the VAT is accounted for as input and output VAT on the same return. 

For consignments of goods not exceeding £135 in value, which are sold business to business (B2B), where the VAT registered business customer provides its VAT registration number to the seller, the business customer will then be responsible for accounting for any UK VAT due on their VAT return. This will use a ‘reverse charge’ procedure if the goods are supplied to Great Britain, or via PVA if the goods are supplied to Northern Ireland. 

Do you need to use postponed VAT accounting?

Do you need to use postponed VAT accounting?

Use of the PVA scheme is optional. If you wish, you can pay the VAT upfront when the goods enter free circulation in the UK (at the port of entry, for example, or after release from a customs warehouse). This will require you obtain monthly C79 reports from HMRC to support input tax recovery, as was previously the case for non-EU imports.

Businesses in Northern Ireland will continue to be considered part of the EU VAT area, so goods arriving from the EU into NI will not be considered imports, and will therefore not incur import VAT. Businesses in Northern Ireland can still use PVA for imports from non-EU countries.

However, use of PVA is mandatory if you defer the submission of customs declarations by making use of the six-month customs deferment period, which applies from 1 January 2021.

Business and non-business imports

Business and non-business imports 

PVA can be used by VAT-registered businesses in the UK, and you do not need prior authorisation. You (or your agent acting on your behalf) need to indicate on the customs declaration that you will be using PVA. You also need to register for the Customs Declaration Service (CDS) to access online monthly postponed import VAT statements, which are required in order to deduct the import VAT on your returns. 

However, you are not able to use PVA to account for import VAT on your VAT return if you import goods that you know will be used solely for non-business purposes. When you complete your customs declaration, you instead have to select that you’ll be making immediate payment or using a duty deferment account.

You are able to use PVA to account for import VAT on your VAT return if you import goods that will be used for both business purposes and non-business purposes, or if you don’t know whether or not they will be used for business purposes at the time that you import them. 

Completing the VAT return

Completing the VAT return

There are changes to the way that the VAT return is completed because of PVA: 

  • Box 1 – include the import VAT payable on PVA imported goods.
  • Box 4 – include the import VAT reclaimable on PVA imported goods – you need to have the monthly certificate from the CDS.  
  • Box 7 – include the net value of imports.

The normal rules about what VAT can be reclaimed as input tax will apply. 

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