Postponed VAT Accounting (PVA) in UK
Postponed VAT Accounting (PVA) is a tax measure that enables UK businesses to defer payment of import VAT when importing goods into the UK. Instead of paying import VAT upfront at the time of import, businesses can account for the VAT on their VAT return.
PVA was introduced to simplify the customs clearance process, and to help businesses manage their cash flow. Under PVA, businesses can declare and recover import VAT on their VAT return rather than paying it to HM Revenue & Customs (HMRC) at the time of import. This means that businesses can delay payment of the import VAT and improve their cash flow. However, it’s important to note that businesses must still pay any customs duty that is due at the time of import.
There are no specific requirements for PVA application and is no need to tell HMRC in advance but to confirm to use PVA in each customs declaration. Businesses only need to have a valid UK VAT number and an Economic Operators Registration and Identification (EORI) number .
Businesses can obtain a Postponed VAT Accounting (PVA) statement on HMRC website with a government gateway account. The statement is an official record to calculate the import VAT due on VAT return.
Overall, PVA provides a valuable tool for businesses to manage their import VAT obligations and reduce their administrative burden. Almost all companies importing goods into the UK would opt for this option.
- Requirements
It is important to ensure that businesses have the correct procedures in place to use PVA, as errors in declarations can lead to penalties. Thus, before importing goods into the UK, businesses must apply a UK VAT number and Economic Operators Registration and Identification (EORI) number because these two numbers are unique identifiers to be used for customs purposes.
There is no formal application process for PVA, businesses do not need to tell HMRC in advance, but they need to confirm to use PVA in each customs declaration.
If freight forwarders or custom agents are handling customs declarations, businesses will need to tell them they would choose to use PVA.
- PVA Statement
Businesses can follow the steps below to obtain a Postponed VAT Accounting (PVA) statement on HMRC website:
(1)
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Log in to Government Gateway account, which is an online system used for tax-related transactions in the UK.
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(2)
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Go to the "VAT" section and select "View your VAT account".
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(3)
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From the list of available options, select "Postponed VAT accounting", select the period for which you want to view the statement, and then click "View statement".
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(4)
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Your PVA statement will now be displayed on the screen, and you can choose to download it or print it for your records.
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It is important to keep all PVA statements up-to-date and accurate, as it will be used to calculate the import VAT due on VAT return. Failure to keep accurate records and declare the correct amount of import VAT could result in penalties or fines from HMRC.
- Benefits
The benefits of PVA for businesses are significant. It helps to simplify the customs clearance process by reducing the need for businesses to pay import VAT upfront at the time of import. This can reduce the administrative burden on businesses and improve their cash flow, as they no longer need to make a cash payment at the time of import.
Furthermore, PVA can help businesses to reduce their costs. If not using PVA import VAT is paid upfront, businesses need to pay this amount to the customs agent or broker, who will then pay the VAT to HMRC. This can lead to additional costs, as the customs agent or broker may charge a fee for this service. With PVA, businesses can avoid these additional costs by declaring and accounting for the import VAT themselves.
- Drawbacks
However, there are potential drawbacks of using PVA. Businesses need to ensure that they have the correct procedures in place and that they submit accurate declarations to HMRC. Errors in declarations can lead to penalties and additional costs.
See also:
2023 New System of Late VAT Return Submission and Payment in UK
Introduction to VAT in the UK
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