Postponed VAT accounting: practicalities

Brexit. Imports of goods worth more than £135 from the EU are now subject to import VAT on arrival.

Pro advice. Import VAT is distinct and separate from the import duties (tariffs) covered by the trade deal agreed on 24 December 2020.

New system. Import VAT is usually payable before the goods will be released. However, postponed VAT accounting (PVA) has been introduced to negate the cash flow issues this could cause for your business. Under PVA, you will account for the VAT on your VAT return instead of needing to pay it upfront. Guidance on eligibility for, and using, PVA is available from HMRC.

Requirements. However, it is not simply a matter of choosing to use PVA – you must first do two crucial things:

• obtain an EORI number, as the freight agent will need to provide this to HMRC in order to release the goods; and
• register for the Customs Declaration Service (CDS).

#AskOscar Of course, you may choose to use a customs agent to take care of things but you will still need the EORI number.

If you are new to importing goods you may have only arrange the EORI number, and not yet go around to registering for the CDS.  It is essential that you do so, as this is where HMRC will publish details of the imports and import VAT that you will need to complete your VAT returns correctly. If you’ve not registered, ensure you do so before the first VAT return under the new rules is due to be filed.

#AskOscar.  A big advantage of PVA is that it will apply to imports from non-EU countries as well, so if you already import from outside the EU, cash flow could improve significantly.