Import VAT and Postponed VAT Accounting
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UK Import VAT
As part of Brexit, the UK government introduced the postponed VAT accounting (PVA) system to help businesses with importing and to reduce the impact that import VAT has on cash flow. Rather than businesses paying VAT on goods at the UK border and reclaiming it on their VAT returns, they are able to postpone the import VAT under the scheme. Therefore, businesses don’t need to make a physical VAT payment for the goods at the border.
Post-Brexit Tax Support Measures
On January 1, 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.
Effectively, the UK importer does not need to pay import VAT when their goods are imported into the UK and then reclaim the VAT back later. Postponed VAT accounting (PVA) allows the 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.
Accounting for PVA on your VAT Return
When you postpone paying import VAT via your customs declaration, you must account for this within your VAT return. You will need a copy of your Monthly Postponed Import VAT Statement (MPIVS), which is accessible via the Customs Declaration Service (CDS) financial dashboard.
HMRC states 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.
Box 4
Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting.
Box 7
Include the total value of all imports of goods in this period, not including any VAT.