HMRC has published guidance on the use of Postponed VAT Accounting in conjunction with a manual duty calculation.

For those of you that aren't aware, CDS is unable to calculate PVA VAT amounts when Additional Information (AI) statement code is used to manually calculate taxes. For example, when completing an OP re-import customs declaration, and up until now, the VAT had to be paid and then reclaimed.

However, HMRC has now agreed a 'workaround' that permits the use of PVA with AI statemen t OVR01.

The C79 or online Monthly Postponed Import VAT Statement (MPIVS) will not be issued for goods items where a manual duty calculation is being made. The customs declaration, including the OVR01 free text statement and supporting commercial records must be retained as the evidence to support the use of PVA.

The table below details the completion instructions that must be followed to enable the use of Postponed VAT Accounting (PVA) when a manual duty calculation is made on CDS.

The table only details the specific requirements when combining the use of PVA with a manual duty calculation. It does not provide exhaustive guidance on making a manual duty calculation or wider obligations in relation to the use of PVA or making a customs declaration.

HMRC advises that, failure to comply with the completion instructions below, to hold documentary evidence to support the use of PVA and to correctly account for PVA on the VAT return may result in the use of PVA being disallowed and a demand for the VAT being issued.

Note: If you are manually calculating the VAT, under Tax Type B00, you must also manually calculate all other taxes, such as customs duties under Tax Types A00, A20, A30, A35, A40 and A45. You must also manually calculate excise duties.

Completion Instructions

DE2/2                    Additional Information

Enter code           OVR01 

Followed by  The reason for the manual calculation (eg. OP re-import) and the PVA amount in GBP (eg. PVA amount £25.16)
 
The amount of PVA that will be accounted for via the VAT return must be declared in the above statement
 
 

DE2/3               Documents

Enter code      9WKS

Followed by The reference number that provides the audit trail to the breakdown within the importer’s commercial record to the manual duty calculation, including the amount of PVA calculated

Notes:

Evidence must be held and made available to HMRC on request supporting the manual duty calculations and use of PVA. Failure to provide the evidence on request may result in a demand for additional revenue and the PVA being disallowed.

DE3/40            Additional Fiscal Reference

Enter code      FR1

Followed by  The VAT number of the party accounting for the PVA VAT and who will be entering the VAT on their VAT return
 
  Notes:
Failure to comply with all the completion instructions in this table, failure to hold documentary evidence to support the use of PVA and to correctly account for PVA on the VAT return may result in the use of PVA being disallowed and a demand for the VAT being issued.

Tax lines must be manually entered

The amount declared in the tax lines must include all other taxes, including import duties to be paid or secured for the goods item prior to their release.

The following example is for manually calculated VAT. You must repeat the process for all duties being paid or secured.

DE4/3                Tax Type

Enter code       B00
 
  Notes:
The tax type codes for all other taxes being paid or secured must also be entered (e.g., A00 for customs duty).

DE 4/4           Tax Base Unit

Enter               GBP

DE 4/4           Tax Base Value

Enter              The value on which the amount of VAT being postponed is being calculated

DE4/6            Payable Tax Amount

Enter              Amount of VAT being collected up front as GBP 0.00 (just 0.00 if your software has already added the GBP)
 
 

Notes:
This indicates the amount actually being paid at the time the goods are declared. As the VAT is being postponed and accounted for via the VAT return, this must be shown as £0.00.

DE4/7            Total Taxes

Enter              The total amount of taxes being paid or secured as GBP 0.00 (just 0.00 if your software has already added the GBP)
 
  Notes:

The VAT amount included in this calculation must be £0.00 as it is not being accounted for on the declaration. It is being postponed and accounted for via the VAT return.

4/8                 Method of Payment

Enter              The Method of Payment (MOP) code being used to pay or secure any other taxes due for the goods item
 
  Notes:
MOP code G must not be used.
Where no other taxes are being paid or secured, this data element should be left blank.