Sellers in the UK can postpone their VAT reporting thanks to the optional PVA (postponed VAT accounting) scheme implemented by the HMRC after Brexit in 2021. With the scheme, the country simplifies VAT payments for imported goods because it allows skipping the VAT procedures at customs. However, speedy clearance isn‘t the only benefit of the scheme.
When the scheme is used, businesses importing goods report import VAT during their routine reports of domestic sales instead of doing this at customs control. Businesses that use the scheme must archive all the import-related data, such as the date of import, the value of goods, and the amount of VAT due.
The PVA scheme is available to all VAT-register businesses in the UK. It is especially beneficial to e-commerce sellers who sell to customers in the UK. More information about VAT in UK here.
Since Northern Ireland has a special clause, businesses operating in Northern Ireland do not pay import VAT on goods imported from the EU. Therefore, they do not need to use this scheme. Instead, they use the reverse charge mechanism.
Eligible PVA companies claim that this scheme helps them to improve cash flow and simplify their bookkeeping.
The scheme allows deferring the import VAT payment for as long as several months, depending on which VAT reporting period is assigned to the company. This means that the company under the PVA scheme can use the freed-up cash for further purchases. The benefit is mostly felt by e-commerce companies that intensively buy goods before selling them to their customers. At the same time, it speeds up customs clearance and simplifies VAT reporting because all VAT data can appear in the same report instead of several installments.
Some PVA users say that PVA gives them a competitive advantage over other sellers that are not using the scheme.
Among other countries that implemented this scheme is France which made it mandatory to postpone import VAT reporting for VAT-registered businesses, and the Netherlands, which requires non-Dutch companies to have a fiscal representative in the country to use the scheme. In some cases, the Netherlands also requires a deposit for the postponed VAT.
If you need help registering for PVA schemes in either of these countries, reach out to our team, and we will help you with this and other VAT-related questions!