Postponed VAT accounting lets VAT-registered UK importers account for import VAT on their VAT return instead of paying it at the border. This guide explains who can use it, how to set it up and the mistakes to avoid.
Quick answer: Postponed VAT accounting (PVA) lets a VAT-registered UK business account for import VAT on its VAT return instead of paying it when goods arrive from China. You declare and reclaim the VAT on the same return, so for most fully taxable businesses there is no cash outlay at the border. You still pay customs duty, you need a GB EORI number, and you must download your monthly postponed import VAT statement from the Customs Declaration Service.
Import VAT is charged at the same rate as VAT on goods sold in the UK, usually 20%, on the value of the goods plus freight, insurance and duty. On a container of stock that is a large sum to find before you have sold a single unit. PVA was introduced on 1 January 2021 to remove that cash flow hit, yet many small importers still pay import VAT at the border because nobody told their forwarder to do anything different. This guide explains how PVA works, how to set it up and the mistakes to avoid.
Without PVA, your freight forwarder or customs agent pays the import VAT to HMRC (or takes it from your duty deferment account) before your goods are released. You then reclaim it later on your VAT return, often weeks after the money left your account.
With PVA, no import VAT is paid at the border. Instead, on your VAT return you:
For a business that can reclaim all its VAT, the two entries cancel out. The VAT is still accounted for, but your cash stays in the business. If you want a refresher on how import VAT and duty are worked out in the first place, see our UK import duty and VAT calculator guide.
You can use PVA if:
You do not need to apply for PVA or get approval in advance. You simply choose it on each customs declaration. If your business is not VAT registered, PVA is not available and import VAT is paid at the border as normal.
Our UK customs duty and VAT guide covers duty, VAT and the low value rules in more detail.
Make sure your GB EORI number is linked to your VAT registration and that your forwarder has both numbers on file. A mismatch is one of the most common reasons import VAT ends up being paid at the border.
Your customs agent completes the import declaration on the Customs Declaration Service (CDS). They need clear instructions to account for import VAT using PVA on every shipment. Put it in writing and ask them to confirm. If you use a courier for samples, ask them too, as couriers often default to paying the VAT and adding a fee. Our freight forwarding service sets this up for clients as standard.
PVA can only be used by the business named as importer on the declaration. If your Chinese supplier ships on DDP terms, the supplier or its agent is usually the importer, and you cannot use PVA on that import. Our guide to EXW, FOB, CIF and DDP Incoterms explains how the terms you agree affect who handles customs.
To see your statements you need to subscribe to CDS using the Government Gateway details for your VAT registration. Do this before your first shipment arrives, as access can take a little time to set up.
Each month HMRC publishes a postponed import VAT statement showing the import VAT you postponed in the previous month. According to GOV.UK guidance, statements are usually available by the 10th working day of the month and can only be accessed for 6 months before they are archived. Download and keep every statement, as it is your evidence for the VAT reclaim.
Using the statement, you normally:
Check the HMRC guidance or speak to your accountant, especially if you use the Flat Rate Scheme or cannot reclaim all your VAT.
A small homeware brand imports a shipment of ceramic mugs from China. The customs value plus freight, insurance and duty comes to a figure on which 20% import VAT is due. Without PVA, the forwarder pays that VAT before releasing the goods and invoices the brand, and the brand waits until its next VAT return to recover it. With PVA, nothing is paid at the border. The import VAT appears on the brand's monthly statement, is entered in Boxes 1 and 4 of its VAT return, and the net effect is nil. The brand still pays the customs duty on the mugs.
PVA is one small part of getting a shipment from a Chinese factory to your UK warehouse. You also need the right commodity code, a clear purchase order, quality checks before shipment and a freight plan. Our complete guide to importing from China to the UK walks through each stage, and our importing products from China to the UK page explains how we support UK businesses from sourcing to delivery.
No. For most VAT-registered importers it is optional, but it usually makes sense because it avoids paying VAT up front and waiting to reclaim it.
No. You do not need approval. You or your customs agent select PVA on the import declaration, using your GB EORI number and VAT registration.
No. PVA is only for VAT-registered businesses. If you are not registered, import VAT is paid at the border and cannot be reclaimed.
No. PVA only changes how import VAT is accounted for. Customs duty is still payable when the goods are cleared.
Sign in to the Customs Declaration Service with the Government Gateway details for your VAT registration. Statements usually appear by the 10th working day of each month.
You can still reclaim it on your VAT return using the evidence HMRC provides for import VAT paid, but you lose the cash flow benefit. Tell your forwarder to use PVA on future shipments.
Usually not. Under DDP the supplier or its agent is normally the importer, so they handle the import VAT. Switching to terms such as FOB or EXW, with you as importer, lets you use PVA.
Epic Sourcing UK helps small businesses find vetted suppliers, check quality before shipment and organise freight and customs with PVA set up from the first order. Book a free chat to talk through your next shipment.
This article is general guidance, not tax advice. Check the latest HMRC guidance or speak to your accountant about your own VAT position.
