IMPS02300 - Background information and policy objectives: accounting of import VAT

VAT becomes due at the time of importation when a customs debt arises. However, when goods are entered to one of the following suspensive arrangements, customs duty and/or import VAT become due only if the goods are subsequently removed to free circulation in the UK.

The suspensive arrangements are:

  • Inward processing
  • Temporary Admission (with total relief from customs duties)
  • Customs Warehousing
  • Isle of Man Free Zones
  • External or internal transit - (although internal transit is not a customs suspensive procedure it is included here as import VAT may become due if the goods are subsequently removed to free circulation)
  • Goods admitted into territorial waters under Authorised Use relief in order to be incorporated into offshore drilling or production platforms for the purposes of the construction, repair, maintenance, conversion or fitting out of such platforms, or to link such drilling or production platforms to the mainland of the UK or for the fuelling and provision of drilling or production platforms. This covers equipping offshore fixed drilling or production platforms within sub-heading 8430 49 and floating or submersible drilling or production platforms of tariff sub-heading 8905 20 irrespective of whether the fixed or floating platforms are located within or outside territorial waters and tubes, pipes, cables and connection pieces linking drilling or production platforms to the mainland.

Import VAT can be accounted for through immediate payment, deferment or through Postponed VAT Accounting (PVA).

Import VAT can be deferred if the importer or their agent are approved for duty deferment.

PVA allows a UK VAT Registered trader to notify HMRC of their intention to account for import VAT on their VAT return. Where PVA is notified the VAT amount will appear on monthly VAT statement that the trader will access digitally. They will use the statement to provide them with the amount of import VAT to be accounted for in box 1 of their VAT return and the amount that can be reclaimed as input VAT in box 4 of their VAT return (subject to the normal rules).

More guidance on the use of PVA is available in Check when you can account for import VAT on your VAT Return and in subsequent pages of guidance.