At Plus Accounting, we specialise in providing expert outsourcing solutions and practical guidance on using Xero to streamline your business processes. In this blog, we’re understanding Postponed VAT Accounting (PVA) and how it can improve your cash flow and ease your administrative burdens.
What is Postponed VAT Accounting (PVA)?
Postponed VAT Accounting is an approach where you declare and recover your import VAT on the same VAT return. Rather than paying VAT upfront when goods are imported and then reclaiming it on a subsequent VAT return, PVA allows these transactions to offset each other in the same period. This system not only simplifies your VAT process but can also enhance your cash flow by reducing the immediate VAT outlay.
Prerequisites for Using PVA
Before you can benefit from PVA, there are a couple of important steps to complete:
- VAT Registration: PVA is available only if you are VAT registered.
- GB Economic Operators Registration & Identification (EORI) Number:
You will need to apply for an EORI number through your online Government Gateway account. The process is quick—typically taking about 10 minutes to complete—and you should receive your number within two working days.
Additionally, you must notify your custom agent that you wish to use the PVA process for your imports.
Managing Postponed VAT Accounting Statements
Once your goods are imported and you’ve updated HMRC with the relevant details, monthly statements will become accessible via your Government Gateway account. These statements, which you must download within six months of their release, provide all the crucial information you need to accurately update your records in Xero.
Integrating Postponed VAT Accounting with Xero
Xero has simplified the process of incorporating PVA details into your VAT return:
1. Locate the PVA Tab on Your VAT Return:
When you generate your VAT return in Xero, look for the dedicated PVA tab at the bottom of the return form.
2. Enter the PVA Details:
Tapping into the PVA tab brings up an interface where you can enter all necessary details derived from your PVA statement. Xero also offers the flexibility to attach a digital copy of your PVA statement to your return.
3. Automatic Offsetting:
Once you’ve entered the details and run your VAT return, Xero will display both the input and output VAT accounts on the return. These entries are designed to contra each other, ensuring that the VAT you declare does not affect your cash flow adversely—there’s no need to pay the export VAT upfront and then reclaim it later.
The Benefits of Postponed VAT Accounting
By using PVA, businesses can achieve smoother cash flow management. The capability to offset the import VAT in the same return minimizes the period your funds are tied up, which is particularly beneficial for growing businesses managing tight budgets.
Need Assistance with PVA in Xero?
At Plus Accounting, our team of experts is here to guide you through every step of setting up and managing Postponed VAT Accounting in Xero. Whether you’re just getting started with PVA or need advice on optimising your current setup, our Plus Advisory Team is on hand to provide personalised support.
Author: Debbie Marriott, Xero & VAT Advisor @ Plus Accounting
Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.
Date published: 22 April 2025