For businesses registered for VAT in the UK, HMRC made some changes to the accounting of import VAT on VAT returns after the end of the Brexit transition period on December 31st, 2020. Learn more about the postponed VAT accounting (PVA) system here and check how your business can account for import VAT.

The accounting for import VAT on VAT returns can generate significant cash flow benefits and advantages. Instead of paying import VAT upfront when goods are imported and reclaiming it later, businesses will handle both declarations and recovery on the same VAT return. Introduced on January 1st, 2021 since Brexit, VAT is now payable on imports coming into the UK from anywhere in the world, including the EU.

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Who can use postponed VAT accounting?

For businesses registered for VAT in the UK, it’s possible to account for import VAT on VAT Return for goods imported into:

• All UK VAT registered businesses (including non-established)
• Businesses in NI will still be considered part of the EU VAT area
• Import business goods to the UK valued at more than £135 (excluding VAT)

Although the new PVA system is optional – meaning businesses can still use the ‘old’ system, it can be a timer saver for UK-registered businesses once it avoids goods being held in customs. A benefit of the new system is that businesses can have access to monthly import VAT statements which are available online.

Before 1 January 2021: companies pay VAT on imports then reclaim this on the next VAT return.
From 1 January 2021: PVA allows businesses to account for the import VAT and reclaim it on the same VAT return.

Although a member of the EU VAT area, Northern Ireland-based businesses can still use PVA for imports from non-EU countries.  Businesses based in the Republic of Ireland can use the postponed accounting system (PVA) for the import VAT due on goods arriving from the UK (excluding NI). The import VAT can be accounted for on a VAT return rather than having to pay it as soon as the goods arrive in Ireland.

If you are interested in learning more about tax compliance in order to enhance your company’s regulation performance in international trade, subscribe to our blog and visit our website​ and ​LinkedIn​ page for more updates. You can also reach out to us by sending a message to ​info@mydutycollect.com. We will be delighted to hear from you.