UK VAT on Imports

How to Handle UK VAT on Imports – The Full Guide.

If your business imports goods into the UK and is VAT-registered, it’s important to get your VAT treatment right. HMRC allows two main methods to handle import VAT: Postponed VAT Accounting (PVA) and VAT paid upfront, supported by a document known as C79.

This guide explains both methods step by step, and helps you manage your VAT Returns, bookkeeping entries, and compliance documents in a clear, easy-to-follow way.

What Is an EORI Number?

To import goods into the UK, your business must have an EORI number (Economic Operators Registration and Identification number). This is a unique reference number issued by HMRC.

Why Do You Need an EORI Number?

1) HMRC uses it to track your imports.
2) Customs declarations must include your EORI.
3) If your EORI is missing or incorrect, you won’t be able to download your C79 certificate or PIVAS.
4) Without it, you cannot reclaim import VAT.

What Does It Look Like?

A UK EORI number usually starts with “GB”, followed by your VAT number and three extra digits. Example: GB123456789000

If your business moves goods between Northern Ireland and the EU, you may also need an EORI number starting with “XI”.

How to Get an EORI Number

You can apply online through HMRC:
1) Go to gov.uk/eori.
2) Apply using your Government Gateway login.
3) Most applications are approved within minutes.

Make sure the EORI is linked to your VAT number for proper import VAT recovery.

Step-by-Step Guide for Importing Goods

Step 1 – Before the Goods Are Shipped

1) Make sure your EORI number is active and linked to your VAT number.
2) Choose whether to use PVA or pay VAT upfront.
3) Give your freight agent clear instructions to include your VAT number and EORI on the customs declaration.

Step 2 – When the Goods Arrive

1) Your customs agent will submit the entry to HMRC.
2) If you use PVA, they use VAT code VATZ.
3) If you pay upfront, they use code VAT.

Step 3 – After the Goods Clear

1) If using PVA, go to the CDS system and download your PIVAS (usually available by the 10th working day of the next month).
2) If VAT was paid upfront, download your C79 certificate from CDS.

Two Ways to Deal with UK Import VAT

Option 1 – Postponed VAT Accounting (PVA)

1) PVA allows you to self-account for import VAT. You don’t pay at the border. Instead:
2) You download the PIVAS statement monthly.
3) You report VAT in both Box 1 and Box 4 on your VAT Return.
4) The cash impact is neutral, which helps with cash flow.

Option 2 – Pay VAT Upfront and Reclaim It (C79)

If VAT is paid during customs clearance:
1) HMRC will issue a C79 certificate.
2) This document is essential to reclaim VAT in Box 4.
3) No value goes in Box 1 as VAT has already been paid.

How to Post the Entries in Your Accounts

Let’s say you import goods worth £10,000, with £500 customs duty, and £700 shipping. The import VAT is 20% on the full value:
VAT = 20% × (£10,000 + £500 + £700) = £2,240