The UK government confirmed that UK Import Postponed VAT Accounting (PVA) will be introduced for all imports from 1 January 2021. This measure was announced in the 11 March 2020 Budget.
Postponed VAT Accounting offers the following benefits:
Allows you to account for import VAT on your VAT return for goods imported from anywhere in the world
Maintains the current cashflow position for goods imported from the EU (formerly referred to as acquisitions)
Provides you with a cash flow benefit while importing goods from non-EU countries if you currently must pay import VAT when the goods cross the UK border.
No authorisation required to use Postponed VAT Accounting. To do so:
The imported goods must be for use in your business
You need to make the appropriate entry and include your EORI starting GB/VAT Registration Number on your customs declaration.
Please visit https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return for further detail.
At the end of the UK’s transition period with the EU (31 December 2020), the Northern Ireland Protocol will take effect. The Protocol is a practical solution to avoid a hard border with Ireland whilst ensuring the UK, including Northern Ireland, leaves the EU, enabling the entire UK to benefit from future Free Trade Agreements (FTAs). There will be special provisions which apply only in Northern Ireland because the Protocol is in force.
How the VAT Return for traders located in NI is affected from 1 January 2021 is therefore quite different to a trader located in the rest of the UK:
Imports/exports of goods between NI and the remaining EU member states (including, and most likely, the Republic of Ireland), and which fall under the NI protocol, must still be included on the UK VAT Return in exactly the same way they currently are (that is as per pre-PVA-rules); for example. EU purchases are still referred to as acquisitions and as such have acquisition tax applied to them (not import VAT).
However, imports/exports of goods between NI and non-domestic non-EU member states must have PVA rules applies to them.
This means traders in NI are required to operate a hybrid system, whereby they must stick with current VAT Return accounting rules for EU imports/exports which fall under the NI protocol but apply PVA rules for non-EU imports/exports.