Owner-Managed Businesses

What is Postponed Import VAT Accounting (PVA)?

Postponed VAT accounting (PVA) was implemented from 1 January 2021 as part of the UK Government’s business support measures for Brexit. PVA is a valuable cash aid to importers which do not use customs warehousing to defer VAT payments to HM Revenue & Customs (HMRC).

We thought it important to flag because many businesses are still unaware of what PVA is, or the benefits which can arise from it. Whilst the use of duty deferment accounts (whether an agent’s or the business’ own) can offer up to six weeks’ delay in paying customs duty and import VAT on imports made at the UK border, the use of PVA allows a business to import its goods without any import VAT payment. Instead, the importer can have their goods cleared through UK customs and then account for the import VAT via its VAT returns – rather than at the point that goods are imported into the UK.

VAT registered businesses can account for import VAT under PVA without a requirement for authorisation of any kind where:

  • goods are imported for use in the business and relate to taxable supplies made by the business; and,
  • the business provides its EORI and VAT registration number details and declares it is using PVA on its customs declaration.

The import VAT will need to be accounted for in the VAT return for the period covering the month in which the goods were imported. We explain this briefly below.

26th January 2022

How is Postponed Import VAT included on a VAT return?

To use PVA, your business will first need to register for the Customs Declaration Service (CDS). This can be done online by clicking here.

Once this has been done, an online monthly import VAT statement should be available for download via the Government Gateway, by clicking here.

This shows the total import VAT related to each month in which the import was made.   This import VAT needs to be included on the VAT return for the relevant period. HMRC have indicated that the statements will become available to view in the first half of each month following the import month, but will only be available to view for six months, so a copy of the statement should be downloaded and kept in the business’ VAT accounting records.

Under the PVA regime, import VAT is claimed on the same VAT return as it is declared to HMRC. Consequently, the VAT deemed payable is netted off against the VAT claimable, therefore no VAT is payable to HMRC overall and so a cash flow cost is avoided.

The import VAT is accounted for as both output tax and input tax on the return, and subject to the business being able to recover that VAT, no net VAT will be payable on the imported goods.

What if I already use duty deferment as a method of import VAT deferral?

If you pay customs duty on UK imports, you can continue to use a duty deferment account to defer the payment of the duty up to six weeks after the import. You can still use PVA for the related import VAT accounting and this will also potentially save on costs associated with operating or using a customs’ agent’s duty deferment account. There is also the cash flow benefit of not having to pay any VAT to HMRC after six weeks or less, as would be the case of dealing with the VAT through a duty deferment account, and then needing to reclaim it on a VAT return. Under such a system, it could be several months later before the VAT reclaim is received.

It should be noted that imports from the EU into Northern Ireland cannot be dealt with under the PVA procedure. This can only be used by businesses established and VAT registered in England, Scotland and Wales i.e. for imports into Great Britain and from outside the UK.

Points to consider

Is your business currently using the most cost effective way of dealing with its imports in terms of VAT and customs duty payments?

Have you considered PVA to cancel out any cash flow impact and reduce related costs arising from using other import VAT entry and payment methods?

How can Old Mill help?

We can advise on implementing PVA and the benefits arising. If you would like to discuss next steps with us, please contact Marianne Hawksworth on marianne.hawksworth@om.uk.