Postponed VAT accounting (PVA)

From 1st January 2021, UK VAT registered businesses are able to account for VAT on imported goods on their VAT return using the postponed VAT accounting system.

Under PVA, instead of paying import taxes immediately and then reclaiming later in a subsequent VAT return, the VAT is accounted for as both input and output VAT on the same return.

This is very similar to the reverse charge mechanism used for EU trade before Brexit. 

Learn more about postponed VAT accounting on HMRC's website.

PVA tax codes

Two tax codes have been added to accommodate these changes. In VAT mode Brightpearl accounts, you can view these codes at Settings > Tax > Tax codes.

Tax code Rate Reporting rate Purpose
PV2 0% 20% Reporting PVA expenses at the standard rate
PV0 0% 0% Reporting PVA expenses at zero rate

These tax codes each have a rate of 0% which applies to the items on an invoice, bill or credit, but a separate reporting rate which is used by the VAT return.

The VAT return

When entering a supplier bill/credit or a purchase invoice/credit using one of these codes, no tax is added to the transaction.

However, the VAT return will account for the reporting rate in boxes 1 and 4. The net amount will be reported in box 7.

Box 1 Includes the VAT due in this period on imports accounted for through postponed VAT accounting
Box 4 Includes the VAT reclaimed in this period on imports accounted for through postponed VAT accounting
Box 7 Includes the total value of all imports of goods in this period, not including any VAT

Note: You should never have any transactions posting to the 2200 Sales tax control account or the 2201 Purchase tax control account using the PV2 or PV0 codes, unless they have been manually entered for the purpose of making corrections to the amount being reported.

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