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Mar 18, 2021 at 11:32 PM

Postponed VAT Accounting (PVA)

1189 Views Last edit Aug 29, 2023 at 09:40 AM 5 rev

Hi All

Please could you advise how to correctly account for postponed VAT on imports from outside of the UK following introduction of Postponed VAT Accounting (PVA) from 1 January 2021. On import of goods into the UK, we were previously required to pay via a third-party import duty and import VAT however from 1 January this VAT will be postponed and is alternatively, to now be recorded as an input and output on our quarterly VAT return. Thus the invoice from third-party logistics provider will be for import duty only.

Rather than paying import VAT at the border and claiming it once a C79 certificate has been received, we are able to declare to account for the VAT under PVA on the import declaration - this moves the reporting of the import VAT to our VAT return, allowing us to account for and reclaim the VAT on the same VAT return.

Although no payment for VAT will be made as such, we still wish to record VAT within SAP by Design to retain a complete audit trail of the transaction and prompt inclusion on our VAT return. Historically, as import VAT was paid to the third-party logistics company, this payment was record as a 'Import VAT Debit Item' on supplier invoice with tax code '14 - Import VAT' thus providing a full audit trail, however as no such payment is to be made this is no longer feasible.

Import VAT is to be calculated based on the customs value of the goods imported which is different to the purchase price for overseas supplier. We have been advised to process the supplier invoice (for goods) with a postponed VAT tax code however the import VAT is not calculated on the purchase price of the goods but rather on the customs value which is inclusive of freight, insurance, freight forwarder fee etc.

What do you see as the correct process when accounting for postponed VAT on import?

Regards

Simon B