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Postponed VAT Accounting (PVA)

With Britain leaving the European Union from 1st January 2021 the rules have changed with regard to Imports from the EC. These imports are now included with the rest of the world and the rules here have changed to help cash fllow.

To avoid having to pay VAT on imports and then claim it back in the next VAT quarter you can apply for Postposed VAT Accounting.

You’ll need details of the imports to be included in the return. This will include:
• any customs entries you have made in your own records
• copies of your monthly postponed import VAT statement, when available

Unless you have delayed your customs declaration, each statement will show the total import VAT postponed for the previous month.

Your statements will become available to view in the first half of each month.

You’ll only be able to access a statement for 6 months from the date it is published, so you must download and keep a copy of each statement in your records.

How to complete your VAT Return

Due to postponed VAT accounting, there will be changes to the way you complete the boxes on your return.

You must account for postponed import VAT on the return for the accounting period which covers the date you imported the goods.

The normal rules about what VAT can be reclaimed as input tax will apply, and your monthly statement will contain the information you’ll need to support your claim.

Box 1

Include the VAT due in this period on imports accounted for through postponed VAT accounting. You’ll be able to get this information from your online monthly statement, or you must estimate the amount if you do not have a statement and have delayed your customs declaration. Create a dummy sales ledger account for the entry and post the monthly amount by entering a VAT only invoice – code to your standard VAT code and XXXX suspense.

Box 4

Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting. You must estimate the amount if you do not have a statement and have delayed your customs declaration. Create a dummy purchase account for the entry and post the monthly amount by entering a VAT only invoice – code to your standard VAT code and XXXX suspense.

Box 7

Include the total value of all imports of goods in this period, not including any VAT.

Note: These rules apply from the quarter ended 31st March 2021. VAT quarter ended 31st December 2020 will be completed as pre-Brexit.

VAT quarters ending on 31st January 2021 and 28th February 2021 will need to be split. HMRC may issue further guidelines on the cross-over periods, so keep an eye open for this.

Date of supply

Note : The Date of acquisition – is normally, the earlier of the:
• 15th day of the month following the one in which the goods come into the UK
• The date the supplier issued their invoice.

You must account for the acquisition tax on the return for the period in which the acquisition occurs, and may treat this as input tax on the same return.

If you delay your customs declaration

If you import goods that are not controlled into Great Britain from the EU between 1 January and 30 June 2021 and delay your customs declaration you must account for import VAT on the return which includes the date you imported the goods.

To complete the boxes on your return, you’ll need to estimate the import

VAT due from your records of imported goods.

When you submit your delayed declaration you must select that you’re accounting for your VAT on your return. Your next online monthly statement will show the amount of import VAT due on that declaration. You’ll then be able to:
•adjust your estimate
•account for any difference on your next return

How to estimate import VAT on your VAT Return

You should make your estimate as accurate as possible, based on the amount you have paid for the goods and any other costs you have agreed to cover, for example:
• packaging
• transport
• insurance

Your estimate can include any customs duties due on the goods, but it does not have to do so.

After you submit your declaration your next monthly statement will reflect the actual import VAT due. This amount will take into account import VAT due on any additional customs duties.

You’ll need to make a final adjustment to reflect the difference from your estimate and account for this on your next return.

Accounting in Prelude

The entries in Box 7 will come from the suppliers invoices so no additional entries are required.

If you create a dummy sales ledger account and a dummy purchase ledger account and post both VAT only entries to suspense account the suspense account will be betted off. However, you will need to periodically offset the sales and purchase ledger accounts with a contra journal entry – see https://help.prelude.software/faq/how-do-i-record-a-contra/

Alternatively, you can create a Cash book nominal receipt for the PVA amount and a Cash book nominal payment for the same amount. This is quicker and easier but not as easy to follow the history.