Import VAT is the charge that worries overseas sellers most, because if it is handled badly it becomes real money tied up, or worse, a cost you never get back. The good news: for a UK VAT-registered business there is a straightforward way to stop that happening.
In short: when your goods enter the UK, import VAT (usually 20%) is due on their value plus any customs duty. If you are UK VAT registered, postponed VAT accounting (PVA) lets you account for that import VAT on your VAT return instead of paying it at the border and reclaiming it later, so for most businesses it is cash-neutral. Your customs agent must select PVA on the import declaration, and you get a Monthly Postponed Import VAT Statement (MPIVS) to support your return.
Import VAT is charged when goods are imported into the UK. It is calculated on the customs value plus any customs duty (and certain other costs), at the relevant VAT rate, usually the 20% standard rate. It is separate from customs duty: duty is normally a cost, whereas import VAT is usually recoverable if you are VAT registered.
Import VAT, whether PVA is used or not, can only be reclaimed by whoever owned the goods at the point of import into the UK. We will work with you to make sure your Incoterms® align with your contractual terms and conditions, so that import VAT does not become a cost (see DDP explained: the two-transaction picture).
Without postponed VAT accounting, import VAT is paid at the border (often via your agent’s deferment account) and then reclaimed later on your VAT return, supported by a C79 certificate. That leaves your money with HMRC in the meantime.
With PVA, you do not pay at the border at all. You account for the import VAT on your VAT return: declaring it and, in the same return, reclaiming it (to the extent you can), so for most businesses it nets to nil. No cash goes out and comes back; it simply flows through the return.
We run this for you as part of your ongoing VAT compliance, so the returns are right and the import VAT never becomes a surprise.
Because you are an overseas business, your customs agent acts as your indirect representative and is jointly liable for the import VAT. Some agents are wary of that and default to paying at the border with a C79, or decline PVA altogether. That is usually a conversation, not a dead end. See working with your customs agent, where we help unlock PVA or find an agent who operates it.
Author: Amanda Bowles (VAT).
Reading time: about 4 minutes.
It does not have to be. With PVA it is cash-neutral for most VAT-registered businesses, because you account for and reclaim it on the same return.
A C79 is the certificate you use to reclaim import VAT you paid at the border. The MPIVS is the monthly statement you use when you account for import VAT under PVA instead.
No. There is no approval process, but PVA has to be selected on each import declaration.
Talk to us. We deal with this often, and we will either help unlock it with your agent or point you to one who operates it.
If you want import VAT handled so it never ties up your cash, contact our VAT team.
Senior Manager
VAT
Associate Director
VAT
