Postponed Import VAT Accounting - A Case For Withdrawal

In 2021 the UK allowed all businesses importing goods into the UK to take advantage of Postponed VAT Accounting (PVA) for Import VAT. Subsequently thousands of Chinese businesses registered for VAT in the UK in order to take advantage of this arrangement which allows them to import goods into the UK without having to pay the VAT until a later date. Unfortunately a large number of these businesses not only mis-declare the value of the goods but they fail to account for the VAT, either on the importation or the sale of the goods.

In 2022 RAVAS and the BBC were instrumental in exposing 11,000 Chinese businesses registered at an address in Wales that were involved in VAT fraud in relation to imported goods sold online. As a result of the press generated RAVAS was contacted by Tim O'Shea, a retired Surveyor in HMC&E and Customs Staff Irregularities Consultant who, in 1983 wrote a report for the then Chancellor of the Exchequer Nigel Lawson. That report highlighted the abuse of Postponed Import VAT Accounting and as a result Chancellor Lawson scrapped it, a move that prevented abuse, protected UK businesses from VAT free imports and generated millions in tax. At the time the move was unanimously supported by all political parties.

When the UK joined the single market in 1993 PVA was reintroduced for EU imports as Acquisition tax. Brexit created an opportunity to scrap PVA entirely but in January 2021 it was extended to all imports into the UK.

Tim has written a new report that details the current impact of PVA and why its application to imports into the UK needs to be urgently reviewed. RAVAS is grateful to Tim for letting us see this document and with his permission we are making it public herewith as we feel that this is a debate that needs to be had. Should PVA be scrapped entirely ?

A copy of the original 1983 report is available on request HERE

Postponed VAT Accounting - A Case For Withdrawal.pdf

Download PDF • 592KB

.