What is the Difference between Postponed VAT Accounting and Reverse Charge?
This page explains the difference between Postponed VAT Accounting and Reverse Charge and where and how they appear on the VAT Register and are submitted to HMRC.
Postponed VAT Accounting
Postponed VAT Accounting (PVA) has been introduced for businesses that are registered to pay VAT and import goods into the UK from abroad (EU and Rest of World). The PVA system allows the business to account for the VAT on their VAT Return instead of having to pay for the VAT at the port of entry. As part of this, you will be able to download a pdf statement showing the total import of VAT postponed for the previous month, see HMRC Guidance - Get your postponed import VAT statement for more details.
For more on PVA, please see:
- HMRC Guidance - Complete your VAT Return to account for import VAT
- HMRC Guidance - Check when you can account for import VAT on your VAT Return
The Impact of PVA on the VAT Return
The PVA amount is added to the VAT return as the amount payable to HMRC, and also to the amount reclaimable. This means you don't pay anything extra to HMRC or reclaim anything extra from them.
Reverse Charge
The reverse charge is how you must account for VAT on services that you buy from businesses who are based outside the UK.
If you are not registered for VAT, the reverse charge will not apply to you.
The
reverse charge is the amount of VAT you would have paid on that service
if you had bought it in the UK. You have to add that amount to the
total of VAT you are going to pay to HMRC that quarter, but also to the
amount of VAT you are going to reclaim in that quarter. That means you
don't pay anything extra to HMRC or reclaim anything extra from them.
For more information, see: