On the 1st January 2021, the UK left the EU VAT scheme. This now means import VAT will be charged on all applicable import shipments entering the UK.
What is Postponed VAT accounting?
Postponed VAT accounting (PVA) is a new tax system being implemented within the UK. If your business is registered for UK VAT you may be able to use PVA to account for import VAT on your VAT Return. This would enable your business to declare and recover import VAT on the same VAT Return rather than paying it upfront at the time of import. It is designed to aid cash-flow for UK companies which may struggle after the transition period ends.
Payment of import VAT
For commercial shipments with a value greater than £135 import VAT is paid via:
- Your company deferment account (DAN) – deferring payment for an average of 30 days
Or, if you do not have a deferment account:
- Your intermediary’s (courier or freight forwarder’s) deferment account – which would incur a fee.
The import duty (if any) and VAT would then either be added to your invoice from the intermediary or collected via cash on delivery.
This new PVA system will now give UK importers another option for the payment of import VAT.
To use the new PVA system you will need to advise your intermediary so the import entry can be completed correctly. So, to avoid any delays be sure to advise all your international parcel carriers and freight forwarders well in advance which option you will be using and provide your company VAT, EORI and deferment account number (DAN) as soon as possible.
How to complete your VAT return using Post VAT Accounting (PVA)
Your company must register via the government gateway here to view and download your monthly PVA statement in .pdf format.
To register you will need:
- Government Gateway User ID and password
- GB EORI Number
- Unique Taxpayer Reference
- The business start date
If you are an individual or a sole trader you will also need your national insurance number.
C79 Import VAT Certificate
A C79 import VAT certificate will still be produced by HMRC but shipments cleared using PVA will not appear on your C79. If your import declarations were made using Customs Handling of Import and Export Freight (CHIEF) you will get your C79 certificate in the post. If your import declarations were made using the Customs Declaration Service (CDS) you will need to get the certificate online here using your government gateway ID.
Remember: You can only reclaim your company import VAT when you receive your company import VAT certificate (C79) from HMRC, as explained above. It is usually available about three weeks after the end of the month in which you received the goods into the UK.