Postponed VAT accounting may sound a bit like procrastination, but it’s actually designed to make your cash flow smoother and VAT simpler.
Put simply, rather than paying your VAT on imported goods at the border, you have the option to postpone the payment until you do your quarterly VAT return. Pretty useful if you’re a small to medium-sized business ordering in bulk and don’t fancy paying 20% before you’ve even sold anything.
Let’s take a closer look at how postponed VAT on imports works, how to organise your postponed VAT accounting monthly statement and whether you’re eligible for this VAT scheme.
Key takeaways:
- Postponed VAT accounting (PVA) improves cash flow by letting VAT-registered businesses defer import VAT until their VAT return, rather than paying at the border.
- Use the Customs Declaration Service (CDS) correctly. Include your EORI and VAT registration number on import declarations to trigger PVA. (The old CHIEF ‘Box 47e = G’ method is no longer used.)
- Reconcile with your MPIVS monthly – HMRC generates a Monthly Postponed Import VAT Statement (MPIVS), which must be checked against your internal records before completing your VAT return.
- Northern Ireland has special rules under the Windsor Framework, so businesses importing to or from NI should always confirm the latest HMRC guidance to ensure compliance.
How does postponed VAT accounting work?
If you’re a VAT-registered company importing goods valued over £135 (excluding shipping and insurance) you’ll have to pay import VAT. With postponed VAT accounting, the government gives you the option to postpone VAT on imports until you submit your VAT return.
The government introduced postponed VAT accounting, also known as PVA, on the 1st of January 2021 for three key benefits:
- To support businesses through Brexit
- To improve businesses' cash flow
- To stop goods being held in customs whilst waiting for VAT payment
Postponed VAT accounting is similar to the pre-Brexit EU reverse charge, but PVA can be applied to goods from anywhere in the world.
There are two steps businesses need to follow to use postponed VAT correctly:
1. Indicate postponed VAT accounting on in your customs declaration
When completing your import declaration through the Customs Declaration Service (CDS), you must:
- Provide your Economic Operators Registration and Identification (EORI) number
- Include your UK VAT registration number (VRN) in the correct header-level data field on the declaration
Note: Under CDS, you do not enter a ‘G’ in Box 47e (this applied under the old CHIEF system and is no longer used for most UK import declarations).
Instead, postponed VAT accounting is triggered by correctly including your VAT registration number on the declaration. This tells HMRC that you’ll account for import VAT on your VAT return, rather than paying it upfront at the border.
If you use a freight forwarder, transporter or customs agent, make sure you’ve clearly agreed in advance that you intend to use postponed VAT accounting – and confirm they are entering your details correctly. Ultimately, responsibility remains with the importer.
2. Access and reconcile your Monthly Postponed Import VAT Statement (MPIVS)
Once your import declaration is submitted correctly using postponed VAT accounting, HMRC will generate a Monthly Postponed Import VAT Statement (MPIVS).
You can access your MPIVS via your business’s CDS account in the month following your imports.
Your MPIVS shows:
- The total import VAT postponed for the period
- The figures you must include in your VAT return
It’s essential to:
- Reconcile your MPIVS against your internal import records
- Ensure the figures match before submitting your VAT return
- Download and retain a copy of each statement
You can only access each MPIVS for six months from the date it’s published, so you should download and store them securely. As with other VAT records, they must be kept for six years.
How do I complete my VAT return if I use postponed VAT accounting?
When it comes to PVA and your VAT return you need to concentrate on boxes 1, 4 and 7.
Box 1
Box 1 is the VAT due in the period on sales and other outputs. You’ll need to include the total amount of VAT that you have postponed, which should correlate to the numbers on your MPIVS.
Box 4
Box 4 is the VAT reclaimed on purchases and other inputs. Unless your business is partially or fully VAT exempt, this will be the same number as what you put in box 1.
If you are partially or fully exempt, you should check with HMRC how to go about calculating your VAT.
Box 7
Box 7 is the total value of all imports (excluding VAT) declared using PVA, plus other purchases and inputs, apart from VAT.
Who can use postponed VAT accounting?
Any UK VAT-registered business importing goods into Great Britain (England, Scotland and Wales) from anywhere in the world can use postponed VAT accounting (PVA).
VAT-registered businesses importing goods into Northern Ireland can also use PVA where import VAT arises – for example, when importing goods from outside the UK or EU.
You don’t need prior approval from HMRC to use postponed VAT accounting. It’s available automatically to VAT-registered businesses, provided import declarations are completed correctly.
What about Northern Ireland?
Northern Ireland continues to operate under unique VAT and customs arrangements for goods under the Windsor Framework.
- Movements of goods between Northern Ireland and EU Member States follow certain EU VAT rules for goods.
- Movements of goods between Northern Ireland and Great Britain may require customs processes depending on the direction of travel and the nature of the goods.
- Import VAT may arise in some GB–NI movements depending on the applicable customs treatment.
It’s important to note that these rules are subject to change and depend on specific trading arrangements. Businesses trading with or through Northern Ireland should always check the latest guidance from HMRC.
Stay on top of postponed VAT accounting with Pleo
Postponed VAT accounting improves cash flow – but only if your records are accurate, your import data is reconciled properly, and your VAT return reflects the correct figures from your MPIVS.
That’s where Pleo Accounts Payable comes in.
Pleo centralises supplier invoices, automates approvals and gives finance teams real-time visibility over spend, so you can:
- Keep import-related supplier costs clearly categorised
- Maintain a clean audit trail to support your MPIVS reconciliation
- Align purchase data with VAT reporting requirements
- Reduce manual errors when preparing VAT returns
- Improve oversight across international purchasing
Postponed VAT accounting removes the need to pay import VAT upfront – but it doesn’t remove the need for strong controls. With the right accounts payable processes in place, your finance team can stay compliant, avoid surprises at VAT return time and maintain full visibility over import-related liabilities.
Turn postponed VAT accounting from a cash flow tool into a well-managed, audit-ready process. Try Pleo today.
