Postponed VAT Accounting (PVA) lets a UK VAT-registered importer account for import VAT on its VAT Return instead of paying it at customs clearance. The mechanism has applied since 1 January 2021 and needs no application or HMRC approval: the choice is made on each customs declaration. Output tax and input tax meet in the same return, so for a fully taxable business the import is cash neutral. For EU suppliers it is the strongest answer to a buyer demanding DDP terms.
The problem: since Brexit, every delivery into Great Britain is an import
Goods travelling from Poland or any other EU country into England, Scotland or Wales go through import clearance, and the import attracts UK VAT at the standard rate of 20%. Without PVA the importer pays that tax at the declaration or through a deferment account and recovers it later through the VAT Return, based on the C79 import VAT certificate. With regular deliveries that means permanently frozen cash: a fifth of the value of every consignment waits weeks for recovery. The full border process is described in our guide to UK customs clearance after Brexit.
That cash fear has commercial consequences. After 2021 many UK buyers started demanding DDP terms from EU suppliers: deliver it, clear it and pay for me, I want it like a domestic delivery. A seller who agrees without preparation takes on somebody else's tax and customs obligations; where that leads is the subject of our article on DAP versus DDP disputes. PVA removes the reason for the demand, because import VAT stops hurting the buyer.
Who can use PVA
The conditions sit in the HMRC guidance "Check when you can account for import VAT on your VAT Return". PVA is available to a business registered for UK VAT that imports goods for use in its own business and whose VAT number appears on the customs declaration. There is no separate application, enrolment or threshold: the decision is made declaration by declaration, at the moment of lodging. The importer can be the consignee's UK company, but also an overseas seller that has registered for UK VAT and acts as importer at clearance.
The mechanism has boundaries. It does not cover customs duty: where the tariff rate is above zero, duty must be paid at clearance or secured on a deferment account. It also does not apply to e-commerce consignments valued at 135 GBP or less, where UK VAT is due at the point of sale rather than at import; that regime is covered in our article on e-commerce transport to the UK.
What goes on the customs declaration and the VAT Return
Technically the PVA choice happens on the import declaration in the Customs Declaration Service (CDS): the importer's VAT registration number is entered at header level, in data element 3/40, indicating that import VAT will be accounted for on the VAT Return. The declaration is usually lodged by a customs agent, so the instruction "we account through PVA" must be part of the agent's brief before clearance, not after. How CDS works and what else the declaration must contain is described in our article on the Customs Declaration Service.
On the accounting side HMRC publishes a monthly postponed import VAT statement, downloaded from the CDS financial dashboard; each statement stays available for 6 months, so download and archive them as they appear. The figures flow into the UK VAT Return in line with the guidance "Complete your VAT Return to account for import VAT": postponed import VAT as output tax in box 1, recovery under the normal rules in box 4, the value of the imported goods in box 7. For a fully taxable importer, boxes 1 and 4 cancel out.
| Scenario | Who is the importer | Import VAT | Cash effect |
|---|---|---|---|
| Payment at clearance (no PVA) | the UK consignee | payable at the declaration or from a deferment account, recovered on the basis of the C79 certificate | cash frozen until the return is settled |
| DAP plus PVA | the UK consignee | declared in box 1 and recovered in box 4 of the same return | no cash outflow with full recovery rights |
| DDP | the Polish seller with a GB EORI and UK VAT registration | the seller pays at clearance or, once registered, accounts through PVA | costs, risk and filing obligations on the seller's side |
DDP from the exporter's side: what you really take on
DDP means the Polish seller is the importer in the United Kingdom. That requires a GB EORI number and, to recover import VAT paid or to use PVA, a UK VAT registration with periodic returns, accounting support and responsibility towards HMRC. On top of that comes customs duty, which under DDP the seller bears definitively, plus responsibility for the accuracy of the import declarations. It is workable, and businesses with large UK volumes run exactly this model, but it is a strategic decision, not a favour for a single customer.
Under DAP the UK consignee is the importer. With PVA its position looks like this: nothing to pay at the border, the same tax declared and recovered on one return, and the only standing duty is the monthly statement download for the bookkeeper. The difference between "put up 20% of the goods value at the border" and "post two figures on a return you file anyway" is the whole substance of the DDP argument.
The negotiation argument
- Name the fear. A buyer demanding DDP usually does not want to be the importer because it expects frozen tax and paperwork. PVA answers exactly that: the tax is not paid at the border but accounted for on a return its bookkeeping files anyway.
- Show the missing entry barrier. The buyer files no application and waits for no approval: its VAT number and EORI on the declaration plus an instruction to the customs agency are enough.
- Offer a ready process. Agree DAP terms in the contract, name the customs agency that will lodge the import declaration with the PVA indication, and hand the buyer a short guide to downloading the monthly statements from CDS.
- Separate VAT from duty. If the tariff rate on the goods is zero, for example thanks to preferential origin under the EU-UK Trade and Cooperation Agreement, import VAT was the only real barrier. With PVA it disappears too.
- Keep DDP for exceptions. Where the buyer flatly refuses the importer role, DDP remains possible, but then negotiate a price that covers UK VAT registration, the filing workload and the cost of financing the tax and the duty.
How we run this
OPTIMUS TRANSPORT runs road transport and customs clearance between Poland, the United Kingdom and Ireland, with warehouses in Kielce, Legnica and Milton Keynes. We help set up the model in which the UK consignee becomes the importer and uses PVA: we prepare the declaration data, keep the document set complete and coordinate the customs agency, and in DDP scenarios we say plainly what the seller takes on. The whole export process is gathered on our export to the UK page, and a specific shipment can be discussed through the contact form.
