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Postponed Import VAT Accounting: What Is It?

December 30, 2022

Companies may disclose and promptly recoup import VAT using postponed VAT accounting. 

 

Postponed VAT accounting (PVA) is a method of recording VAT payments in the United Kingdom. Those interested in taking advantage of this streamlined process need not fill out any special paperwork.

 

The VAT return may be filed later; however, the VAT on imports can be claimed right away. The import VAT is not charged at customs while employing this system.

 

When importing goods, businesses often must pay VAT to Customs. When postponed import VAT accounting is permitted, however, taxpayers will no longer have to pay import VAT in advance at Customs; instead, they will be able to directly declare it in the VAT return using the Reverse Charge mechanism, i.e., to declare it as both taxable and deductible in the same return, thus not affect VAT. 

 

Because of this simplicity, importers will no longer have to pay the VAT to Customs, which is a massive boon to their cash flow. Import VAT reverse charge is another name for this process.

Deferring the payment of import VAT is not the same as postponing its accounting.

 

When VAT on importation may be paid at a later date, this practice is known as import VAT deferral. Despite the postponement, the original payment deadline remains unchanged.

 

Alternatively, when VAT is payable and deductible through the VAT return, this is referred to as "postponed import VAT accounting." The comparable impact of import VAT on the taxpayer is zero. Under the deferred import VAT accounting system, there is no need to pay VAT on imported goods.

 

Import VAT will only be paid under this plan if firms do not have the full authority to deduct VAT (such as financial services organizations, some real estate businesses, etc.). That's because you have to list it as a VAT liability, but you can't list it as a VAT deduction.

 

Postponed VAT accounting on imports has been made available in most EU nations under varying circumstances:

  • France requires all importers to use this procedure. 

  • However, Germany stands out as a country that has not implemented import VAT postponement.

  • Even though import VAT accounting in Spain is voluntary, it is tied to extra administrative duties like those imposed by SII.

  • The United Kingdom uses import VAT accounting as its default method of VAT recovery.

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How Postponed Import VAT Accounting Works for Businesses Importing Goods into the UK

The manner in which postponed import VAT is declared varies from country to country. Typically, the reporting will adhere to the logic of the reverse charge mechanism: you will be required to declare the VAT amount as payable and deductible on the same VAT return.

 

In certain jurisdictions, there are designated boxes for this reporting. Such is the situation with France, for instance. In other cases, you will be required to fill out the available boxes for input and output VAT, similar to the UK VAT return.

In the United Kingdom, these boxes must be completed on the VAT return:

  • Include the amount of VAT attributable to imports in Box 1.

  • Enter the amount of VAT incurred on imports and any remaining VAT deductions in Box 4.

  • Complete the value of all your purchases, including the value of your imports in Box 7. In other words, you should leave this field blank.

Where Can You Find Your Monthly Postponed Import VAT Statement?

Once the postponed import VAT accounting system is in place, the monthly import VAT statement will be available for download. The specifics of doing so may differ depending on your location.

  • A good case is the French habilitation of the ATVAI Données database. However, you may need to fill out the CONVENTION D'ADHÉSION ET D'HABILITATION AU SERVICE EN LIGNE before you can access your company's customs information DONNÉES ATVAI and submit it to the customs office. 

  • You may see and save a copy of the Spanish VAT statement for postponed imports by clicking this link and navigating to the "Consultas" and "Consulta del IVA importación con diferimiento de pago" sections, respectively.

  • The postponed import VAT statement may be seen online or downloaded in the United Kingdom. To continue, please click here and sign in using the HMRC account details associated with your EORI number. Once a statement is released, it will be unavailable for six months. Keep a copy of each statement you download for your own records.

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