Postponed Import VAT accounting for businesses importing goods into the UK
Postponed Import VAT Accounting (“PIVA”) allows businesses to account for any import VAT and recover it (subject to normal input VAT rules) on their VAT Return, rather than physically paying it at the port of entry (or via a freight forwarder) and claiming it back on their VAT return once a valid C79 has been received (subject to normal input VAT rules).
The purpose of PIVA is to avoid an impact to a business’s cash flow when importing and if your business already imports from outside the EU then it might see cash flow benefits because it removes the need to physically pay any import VAT that may due.
What is postponed VAT accounting and how does it work?
VAT is payable on imports of over £135 coming into the UK from any country in the world. Following Brexit, this now includes imports from the EU.
The PIVA system aims to avoid the negative cash flow impact on businesses that are hit by any import VAT and should help avoid having goods held in customs until the VAT is paid.
PIVA is similar to the acquisition VAT system used before Brexit for trading goods in the EU. Rather than physically paying any import VAT and then claiming it back on the next VAT return (subject to a valid C79 and normal input VAT rules), the VAT is entered as output VAT and input VAT (subject to normal input VAT rules) on the same return.
The outcome should be the same, but the importer should avoid the physical payment of the VAT on importation.
Please note that PIVA is different to delayed import declaration, which delays sending HMRC the full information about your goods by up to 175 days on a supplementary declaration.
Do I have to use PIVA?
No. Use of the PIVA scheme is optional. If you wish, you can pay the VAT upfront when the goods enter the UK for example at the port of entry (or via a freight forwarder) or after release from a customs warehouse.
This will mean obtaining monthly C79 reports from HMRC, as has historically been the case for all non-EU imports.
Filling in the paperwork
In order to use PIVA you must inform your freight forwarder or similar so they can select the option on the import declaration to confirm that you will be accounting for any import VAT on your VAT return under PIVA.
Under PIVA any import VAT should be accounted for on your VAT Return in Box 1, Box 4 (subject to normal input VAT rules) and Box 7. Brexit rules will continue to evolve over the coming months and years so it’s strongly advised businesses check the Government website regularly to keep abreast of any changes. We have provided some useful links below:
Complete your VAT Return to account for import VAT – https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat
Import VAT must be calculated after duty and other costs. Therefore, businesses may find it difficult to estimate import VAT based simply based on supplier invoice figures.
HMRC should provide a PIVA statement each month which should show the total import VAT postponed for the previous month. This statement should be available by the 6th working day the following month.
Businesses will need to download this statement and reconcile it to their records to ensure that the imports on their PIVA statement match the imports on their records. Any discrepancies should be investigated.
The PIVA statement forms a vital part of your VAT accounting records. Therefore, you will need to download, reconcile and retain copies for your records in case the information is no longer available online.
In order to view the statement, businesses should sign up for the customs declaration service using the link below:
Once registered for the customs declaration service, businesses should be able to access their statement using the following link:
PIVA and Northern Ireland
Businesses in Northern Ireland can make use of PIVA, just like businesses in England, Scotland or Wales if they wish.
The Northern Ireland Protocol following Brexit and the end of the transition period means Northern Ireland has unique VAT and customs arrangements for trade with EU countries, compared to England, Wales and Scotland.
So, goods entering Northern Ireland from the EU are not classified as imports and any acquisition VAT should be accounted for in the same way as pre-BREXIT. Businesses in Northern Ireland are still able to use PIVA for imports from countries outside the EU.
There will be no need to use PIVA when moving goods from the Republic of Ireland or other EU countries because these will continue to be treated as intra-community supplies and acquisitions – just as they were prior to Brexit/end of the transition period.
For goods travelling between Northern Ireland and mainland UK, current guidance suggests these movements will not incur import VAT and instead will largely be treated as they have been historically in respect of VAT — that is, like domestic sales and purchases.
If your business is currently using SAGE there is a useful link in order to determine the tax code that should be used following BREXIT. The link asks a series of simple questions then should provide you with the correct tax code. Please find the link for SAGE 50 and SAGE 200 below:
PIVA in theory should be simple to use and is intended to bring relief to businesses concerned about the cash flow impact of importing goods.
PIVA is available for all goods imported outside the UK, not just goods imported from the EU.
There are of course new administrative requirements when it comes to dealing with PIVA and if need our advice, get in touch.
The information was correct at time of publishing but may now be out of date.