Postponed Import VAT Accounting 

Since 1 January 2021, UK VAT registered organisations have been able to declare and recover import VAT on the same VAT Return. This accounting practice is known as Postponed Import VAT Accounting (PIVA). It is voluntary to use it and, if you decide to do so, there is no need to apply to or inform HMRC ahead of time.

Most organisations choose to import goods into the UK using PIVA due to the cashflow benefits it brings. VAT is no longer payable at the border, and you no longer need to wait for HMRC to issue a C79 to recover the import VAT. Depending on timing, an importer could wait for several weeks to recover the import VAT it had paid upfront at the border – the use of PIVA eliminates this delay.

Completing the VAT Return

If choosing to use PIVA, VAT-registered businesses must account for import VAT due in the VAT return period which covers the date they imported the goods. For example, if a business submits VAT returns on a calendar quarter basis and imports goods into the UK on 2 May 2024, it will need to account for the import VAT due in the June 2024 VAT return.

The VAT return boxes will need to be completed as follows: 

• Box 1 – import VAT due for the period. Access to this information will be via the PIVA statement or, if you cannot access your statements, you can estimate the import VAT figures. 
• Box 4 – recovery of import VAT is subject to the normal rules, so any treated as input tax is included here. If you are a fully taxable business, the amount of import VAT in this box will typically equal that in Box 1. 
• Box 7 – the total net value of all goods imported into the UK in the accounting period (calculated as 5 times the import VAT incurred).

There is no need to put an amount in Box 6 of the VAT return.

Monthly Postponed Import VAT Accounting Statement

VAT registered organisations will select that they will be using postponed accounting to declare their import VAT on the customs declaration. As the CHIEF system is no longer available to importers, organisations must select that they will be using postponed import VAT accounting as follows:

Declarations via Customs Declaration Service (CDS) 

Enter your VAT registration number at header level in Data Element 3/40. 

• Importers may also enter “role code” FR1 as the first component of the Data Element (please note, this is optional).
• On successful completion of the CDS import declaration, the customs declaration document will display Data Element 3/40 as below:

FR1 GBXXXXXXXXX

Following the correct completion of the customs declaration, a PIVA statement will be generated which shows the total import VAT payable each month. Statements will be available to view in the first half of each month via the Customs Declaration Service (CDS). For example, a PIVA statement should be available for download via CDS in the first half of July 2024 for imports of goods made in June 2024. It is important to note that CDS only provides six months’ worth of PIVA statements. Although there is a mechanism to request older statements if needed, it is preferable to download the statements each month and retain them within your VAT records.

How should I estimate import VAT on my VAT Return?

The estimate of import VAT should be as accurate as possible. As a starting point, the VAT value should be based on the amount paid for the goods plus any other costs you have agreed to cover (this may include packaging, transport or insurance). It can include any customs duties due but this is not required.

It is important to note that an estimate should only be used where the monthly PIVA statement is not available.

Next steps

If you would like to use postponed accounting, it will be important to notify this to the freight forwarder/shipping agent completing the customs declarations for your organisation. It may be that your freight forwarder/shipping agent will apply postponed import accounting automatically, but they should notify you of this. They will need to know your VAT and GB EORI numbers to ensure that they complete the import documentation correctly and HMRC is notified accordingly. This will then generate the monthly PIVA statement.

Those responsible for completion of the VAT return will need to ensure that the import VAT is captured correctly, including the evidence to support those amounts (i.e. a valid estimate or the downloaded PIVA statement).

If you would like to discuss this issue further, please contact Rob Janering or your usual Crowe contact.