VQOTW: Application of Postponed VAT Accounting on excise goods
My client is importing wine from overseas.  Will they be able to use Postponed VAT Accounting to declare the VAT on import?

Essentially the answer is yes, Postponed VAT Accounting (PVA) is a scheme that has significant cash flow benefits for business and allows then to declare and recover import VAT on the same VAT Return, rather than having to pay it upfront when the goods are imported and recover it later.

If the business is registered for VAT in the UK, it can account for import VAT on its VAT Return for goods it imports into:

  • Great Britain (England, Scotland and Wales) from anywhere outside the UK
  • Northern Ireland from outside the UK and EU

A business does not need any approval to account for import VAT on its VAT Return.

HMRC also state the scheme can be used for Excise Goods, such as beers wines and spirits.  Import VAT is accounted for on Excise Goods when they are released for home consumption, and this includes when goods are released from an excise warehouse after being in duty suspense since the point of import.

At the point when completing the customs declaration, businesses can select to account for import VAT on their VAT Return, but they cannot change how to account for import VAT on their customs declaration once it has been submitted.

Businesses must account for postponed import VAT on the return for the accounting period which covers the date they imported the goods. The normal rules apply for what VAT can be reclaimed as input tax and the monthly statement obtained online from HMRC will contain the information to support the reclaim.

Box 1

Include the VAT due in this period on imports accounted for through postponed VAT accounting. You’ll be able to get this information from your online monthly statement, or you must estimate the amount if you have delayed your customs declaration and do not have a statement.

Box 4

Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting. You must estimate the amount if you have delayed your customs declaration and do not have a statement.

Box 7

Include the total value of all imports of goods in this period, not including any VAT

The main issue for Excise goods and PVA will be when they are held under duty suspension in an Excise Warehouse.  The warehouse-keeper responsible for storing the goods and accounting for VAT and Excise Duty will issue either a W5 remittance advice or a W5D.  This will detail the amount of Excise Duty and VAT payable on release of the goods to Home Use, and if PVA is used the Excise Duty only.  However, these amounts will not be included in the monthly statement available online from HMRC.

Instead, as per the guidance regarding W5 and W5D, to use postponed VAT accounting to declare and recover import VAT on the VAT return, the warehouse-keeper will complete the Value/Rate boxes and enter ‘ACQ VAT’ in the Amount of VAT box. This should then be retained by the business to calculate the value for VAT declared. ‘You will need this to complete your VAT return as you will not receive a monthly postponed import VAT statement’.

Form W5D and its completion notes can be found at the following link:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/943938/W5D.pdf

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VAT Adviser

David has worked in a variety of compliance roles for HMRC for over 30 years prior to joining Croner Taxwise.  He began his career as a VAT Compliance Officer before moving as a Computer Audit Officer to Large Business where he was responsible for VAT audits at some of the largest companies in the UK.  Since then, he has worked as VAT Consultant specialising in Alcohol and Missing Trader fraud.

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