As everyone who trades internationally is aware, taxes need to be paid on import into the destination country.  The UK is no different, where importers need to pay VAT (unless VAT exempt products or business) of which the standard rate is 20%.  A lot of UK importers continue to account for the VAT in the traditional manners by making payment at the point the goods are imported before later reclaiming the import VAT.   

However, there is another option which can have benefits for a business's cash flow by allowing them to declare import VAT and reclaim it as input tax on the same VAT Return.  

This option is known as postponed VAT accounting (PVA).  


Alternative methods of accounting for import VAT require a business to pay the sum due before later reclaiming that payment through a VAT Return.  This can have big implications on a business's cash flow.  By using PVA a business can remove the concerns in regards to cash flow by accounting for and reclaiming import VAT in the same VAT Return.   

A business should note that PVA can only be used for the import VAT.  For example, it is not possible to account for customs duty through PVA.   However, simply for the reasons listed above, there are clear benefits for a business to use PVA to account for import VAT.  The last piece of advice to any business would be to speak to their freight forwarder, fast-parcel operator or customs intermediary before moving their goods and, put any instructions in writing.  

For more information, have a look at the below: 


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