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Postponed import VAT accounting for stock importers and the VAT margin scheme for second-hand resellers.

<a href="https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return">Postponed VAT accounting (PVA)</a> lets VAT-registered importers declare and recover import VAT on their VAT return instead of paying cash at the border and waiting to reclaim it. For an FBA seller importing stock into the UK, PVA is the cash-flow default: it removes a border VAT cash outflow that can run to tens of thousands of pounds per shipment. Separately, sellers of eligible second-hand goods can use the <a href="https://www.gov.uk/vat-margin-schemes">VAT margin scheme</a>, which charges VAT on the margin between purchase price and sale price rather than the full selling price. Both require VAT registration and specific record-keeping; neither is automatic.

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Same return
Postponed VAT accounting: import VAT is declared and recovered on the same VAT return. No border cash payment. Available to all VAT-registered UK importers. <a href="https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return">Source: HMRC PVA guidance</a>.
Margin only
The VAT margin scheme charges VAT on the difference between what you paid and what you sold the item for, not the full selling price. Strict eligibility and record-keeping conditions apply. <a href="https://www.gov.uk/vat-margin-schemes">Source: HMRC margin schemes guidance</a>.
VAT-registered only
Both PVA and the margin scheme require VAT registration. Unregistered sellers cannot use either mechanism.

Key considerations.

Postponed VAT accounting: the cash-flow default for FBA and stock importers

<p><a href="https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return">PVA</a> works by moving the import VAT obligation from the border to your next VAT return. Instead of paying 20% of the customs value in cash at the port or airport and then waiting for the next return cycle to reclaim it, you declare the same amount in box 1 (output tax) and box 4 (input tax) of your VAT return. The cash difference is significant for a seller shipping large consignments: a £50,000 shipment of goods carries £10,000 of import VAT that PVA keeps in your business rather than in a HMRC float.</p><p>HMRC issues a monthly <strong>postponed import VAT statement</strong> for each UK importer using PVA. This statement must reconcile to the boxes 1 and 4 entries on your return. If the statements are not being downloaded and reconciled each period, the return is unreconciled and a compliance risk. For generic importer PVA mechanics (customs declarations, commodity codes), see the generalist importing guide at <a href="https://www.hollowaydavies.co.uk/blog/vat-and-making-tax-digital/vat-accountant-importing-goods-outside-uk">Holloway Davies</a>.</p>

When the £135 rule applies instead of PVA (and why the two do not overlap)

<p>PVA applies to import VAT at the border. The <a href="/vat/135-import-rule">£135 import rule</a> applies to supply VAT at point of sale, not at the border. For consignments of £135 or less sold directly to UK consumers from outside the UK, it is supply VAT at point of sale that applies; there is no border import VAT to postpone. PVA is relevant for above-£135 consignments where the seller is importing stock for storage and onward sale (FBA, 3PL), not for the direct-to-consumer sub-£135 route. The two regimes are mutually exclusive on the same consignment.</p>

The second-hand margin scheme: VAT on the margin, not the full price

<p><a href="https://www.gov.uk/vat-margin-schemes">The VAT margin scheme</a> lets resellers of eligible used, refurbished, antique or vintage goods pay VAT on the difference between their purchase price and their selling price, rather than on the full sale value. The scheme applies item by item, not across the business as a whole.</p><p>The key eligibility condition: you must have bought the goods <strong>without VAT being charged to you</strong>. Goods bought from a private individual, from another margin-scheme dealer, or from a non-VAT-registered seller can go into the scheme. Goods on which VAT was charged to you on purchase (including goods with a VAT invoice from a VAT-registered trader) cannot go into the margin scheme. Importing new goods from Alibaba carries import VAT; those goods do not qualify.</p>

Record-keeping conditions for the margin scheme

<p><a href="https://www.gov.uk/vat-margin-schemes">HMRC requires</a> a stock book for margin-scheme goods, recording every item bought and sold under the scheme. Each item needs a purchase record (date, supplier, purchase price, description) and a sales record. The margin is calculated per item. If the purchase price exceeds the sale price on a single item, the loss on that item cannot be set off against margin on other items. HMRC can disallow margin-scheme treatment across all items if the stock book is inadequate, turning the tax saving into a liability.</p>

How we help.

PVA set-up and monthly statement reconciliation

We set up postponed VAT accounting for importing sellers, download and reconcile monthly HMRC PVA statements to VAT returns, and ensure import VAT is correctly treated in the accounts and the return. Service: <a href="/services/ecommerce-vat-compliance">ecommerce VAT compliance</a>.

Margin scheme eligibility assessment and stock book set-up

We assess whether your goods qualify for the margin scheme based on <a href="https://www.gov.uk/vat-margin-schemes">HMRC's eligibility conditions</a>, review your purchasing records, and set up the stock book and per-item invoicing required for compliant margin scheme operation. See also <a href="/blog/bookkeeping-and-inventory/cogs-inventory-basics">stock accounting basics for resellers</a>.

Ongoing VAT compliance for importers and resellers

We handle ongoing VAT returns covering both standard VAT goods and margin-scheme goods, with correct PVA reconciliation, per-item margin calculations, and the zero-rated export treatment for stock sold outside the UK. Note: <a href="https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703">exports are zero-rated</a>, not exempt; zero-rating preserves your input VAT recovery while exempt supplies do not.

Common questions

What is postponed VAT accounting and should I use it?
PVA lets UK-VAT-registered importers account for import VAT on their next VAT return instead of paying cash at the border. For regular importers of stock (FBA, wholesale), it removes a significant cash float tied up in border VAT payments and simplifies cash-flow management. If you are VAT-registered and import goods, you should be using PVA. <a href="https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return">HMRC PVA guidance</a>.
Do I need to be VAT-registered to use postponed VAT accounting?
Yes. PVA is only available to VAT-registered UK importers. Unregistered importers pay import VAT at the border and cannot reclaim it.
I import consignments under £135. Does PVA apply?
No. For consignments of £135 or less sold directly to UK consumers from outside the UK, it is supply VAT at point of sale that applies (under the <a href="/vat/135-import-rule">£135 import rule</a>), not import VAT at the border. PVA applies to above-£135 consignments where import VAT is due at the border.
Can I use the VAT margin scheme for goods I buy from Alibaba?
No. The margin scheme applies to second-hand goods bought without VAT being charged to you. New goods imported from Alibaba carry import VAT; VAT is charged on importation. Those goods do not qualify for the margin scheme. The scheme is for genuinely used or second-hand goods acquired from a private individual or another margin-scheme dealer where no VAT was charged on the purchase.
What is the difference between the margin scheme and normal VAT?
Under normal VAT, you charge VAT on the full sale price. Under the margin scheme, VAT applies only to the difference between your purchase price and sale price for that item. If you bought an item for £100 and sold it for £160, normal VAT is on £160; margin-scheme VAT is on the £60 margin only. The scheme saves VAT where margins are modest, but requires strict per-item record-keeping.
Is a zero-rated export the same as VAT-exempt?
No. They are different VAT treatments with different consequences. <a href="https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703">Exports of goods from the UK are zero-rated</a> (with evidence requirements under Notice 703), meaning they count as taxable supplies at 0% and preserve your right to recover input VAT on the costs associated with them. Exempt supplies do not count as taxable turnover and input VAT cannot be recovered on costs directly attributable to them. Never treat zero-rated exports as exempt.

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