What is Postponed Import VAT Accounting (PIVA) and how does it work?

Any goods entering the UK, from anywhere in the world (including EU), will be subject to import VAT. The importer (usually the buyer/customer) is the party responsible for paying import VAT.

What is Postponed Import VAT Accounting?

Postponed import VAT accounting allows businesses to declare and immediately recover import VAT directly on their VAT return. Essentially this means that you do not pay import VAT at customs upfront when using scheme.

Import VAT is payable at the time the goods arrive into the UK.  The payment options are usually either the freight agent/courier pays this import VAT to HMRC and then recharges it back to the importer (plus an admin fee) or since Brexit, the importer can postpone the import VAT and account for this VAT directly on their VAT return.

What is the benefit of using Postponed Import VAT Accounting?

The main benefit of Postponed VAT Accounting (PIVA) is that the importer can account for import VAT on their VAT return which creates a cashflow benefit, else if the freight agent/courier pays the import VAT, they will want reimbursement within 7 days and the importer then has to access their C79 certificates and cannot reclaim this VAT back until their next VAT return filing period. 

Example of how PIVA works

Freight agent will give HMRC the importers GB EORI number, this allows the goods to pass without payment of import VAT.  The importer downloads their MPIV statement and account for the import VAT by declaring it (the VAT as per the MPIV) on their VAT return in Box 1 (output tax) and in Box 4 (input tax) so there is no cashflow impact. The buyer also includes the net value in Box 7 (purchases excl. VAT).

If the business is partially exempt, then import VAT is declared in full in Box 1 but input tax recovery in Box 4 will be determined by the partial exemption calculation.

How do I set PIVA up?

Before you can use postponed import VAT Accounting, you need a GB EORI number, so if you do not have one, you can request one from HMRC.  It will take the form of your GB VAT number with three added zeros to the end of your VAT number.

Once you have an EORI number, you then need to enrol to access the Customs Declaration Service (CDS) :

  1. Register for the Customs Declaration Service (CDS), link here, and follow the instructions.  You will need Incorporation number, Incorporation Date, Business Address/Postcode and VAT number.  If you get an error, it is usually the postcode that causes the issue, use the address as per VAT certificate, not as per companies house (if they are different).
  2. Once registered with the CDS (give it 10 minutes for databases to update) and then you can access the Monthly Postponed Import VAT Statements (MPIVS) via link here. You must use this link before logging into your gateway, if you login directly to your gateway you will not see any menu option to view your postponed import VAT statements.

Good to Know

When goods enter the UK, they are subject to import VAT.

If the freight agent/courier pays this VAT on day goods arrive into UK, the courier/freight agent will recharge this back to the business plus an admin fee and HMRC will issue a C79 certificate to the business.  Historically the C79 was sent in the post/paper form but is now only issued electronically, these C79’s can be accessed in the same link as postponed import VAT statements and to access that link you ned to have registered for CDS, so follow stages 1 and 2 in this document first.

If the freight agent doesn’t pay the VAT on day goods arrive, the assumption will be you are using Postponed Import VAT accounting, you will not receive a C79.  Instead, you must log in using the earlier link and download the monthly import VAT statements (MPIVS).

As the MPIVS only stay online for 6 months, the scenario could arise where you are not aware the freight agent has assumed you are postponing VAT and when you do realise and enrol for the service, those earlier statements may no longer be visible.  So do check sooner rather than later that you have access to CDS/MPIVS before it is too late.

FAQ’s on Postponed Import VAT Accounting

  1. “I don’t know where to access the Monthly Postponed Import VAT Statements (MPIVS)”. 

Logging into your government gateway does not give you access to the MPIVS, you have to use a specific link first and then login, the specific link is here (bookmark this link).

  1. “I haven’t paid any import VAT and not had any paperwork from HMRC or freight agent”.

Some freight agents default to using Postponed Import VAT Accounting, even if you’ve not asked them, even if you’ve not enrolled to use it.  So if not done so already, enrol for the Customs Declaration Service (CDS), link here, and then you will receive a monthly reminder email and link to log onto your gateway and download your MPIVS. 

Most freight agent/couriers now default to postponing the import VAT as long as they have your EORI number, there is a disconnect here because the courier can postpone VAT even though the importer has not subscribed to the scheme. 

As the MPIVS only stay online for 6 months, the scenario could arise where you are not aware you are postponing VAT and when you do realise and enrol for the service, those earlier statements may no longer be visible. 

  1. “The invoice from the EU supplier has no VAT on it, do I reverse charge like before?”

If the invoice is for services, then yes, you do still reverse charge those invoices.  But if the invoice is for goods from the EU, then we no longer reverse charge.

Imports where the freight agent pays the import VAT at the dock/port, then you used to receive a C79 in the post from HMRC and this C79 was your document to reclaim the import that the freight agent had paid on the day the goods entered the UK.

C79’s are no longer issued via the post, instead they are accessed from the same weblink as postponed import VAT statements, so to receive C79’s you’ll need to enrol for CDS and having done that, you might as well just instruct your freight agent to use postponed VAT and that way you gain the cashflow benefit and either way will have to enrol for the CD system.

Unless you are using the same freight agent every time, your imports will be handled by different couriers and freight agents and unless they are instructed beforehand, then some will default to postponed import VAT accounting, some will pay the import VAT and recharge to you plus admin fee and then you need to login to government gateway to access the C79 certificate online.

The suggestion is that your accounts team need to be aware of these two different ways in which VAT can be treated on imports and they need to know the difference and when to use the appropriate VAT codes.

  1. “I was expecting a C79 but have not received it in the post as yet?”

First check your paperwork, the freight agent may have defaulted to postponed VAT without telling you.  C79’s used to be sent in the post so it was possible for them to get lost in the post, but since 2023, C79’s are accessed from the same website/link as the postponed import VAT account.

  1. “How do I account for import VAT in my accounting software?”

Different software has different ways of dealing with import VAT, remember that import VAT can be paid by freight agent/deferment and then reclaimed afterwards (C79) or by postponing (MPIVS).

For a fully taxable business that can reclaim all input tax, it is still important to be get the coding/data entry correct, because you still need to ensure you are compliant for Making Tax Digital (MTD) purposes.   

For businesses which are partially exempt, it is especially important to get the VAT coding correct, as a partially exempt business may not be able to reclaim all of the VAT it incurs, including import VAT.

Speak with you cloud software providers for an update on what coding to use.

Get in Touch

For further information about postponed import VAT accounting, and how it works, or for any queries relating to registering for PIVA or any other VAT queries, please get in touch with our VAT experts.

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