VAT on Imports and Exports
Understand import VAT, postponed accounting, zero-rated exports and the reverse charge for UK businesses trading internationally.
Since the end of the Brexit transition period, VAT on international trade works very differently. Goods moving between Great Britain and the EU are now treated as imports and exports, just like trade with the rest of the world. For VAT-registered businesses, this changed how import VAT is paid, how exports are zero-rated, and how the reverse charge applies to services bought from overseas. Getting these mechanics right keeps your VAT return accurate and protects your cash flow.
VAT on goods imported into the UK
When you bring goods into the UK from anywhere abroad, import VAT is generally due at the same rate that would apply if you bought the goods domestically (most commonly the standard rate). Import VAT is separate from customs duty, which depends on the goods’ commodity code and origin.
For VAT-registered businesses, import VAT is usually recoverable as input tax, provided the goods are used for taxable business purposes and you hold the correct evidence. Your monthly C79 certificate from HMRC, or your postponed VAT accounting statement, is the document that supports the claim. In your ledger, this is tracked through import VAT accounts in the chart of accounts.
Northern Ireland follows special rules under the Northern Ireland Protocol and still aligns with EU VAT for goods in some respects, so trade between NI and the EU is treated differently from trade through Great Britain.
Postponed VAT accounting
Postponed VAT accounting (PVA) lets VAT-registered importers account for import VAT on their VAT return rather than paying it to HMRC at the border and reclaiming it later. This avoids tying up cash while you wait for a repayment.
With PVA, the same figure is entered as both output VAT and input VAT on the same return, so for a fully taxable business the net effect is nil. The key benefits:
- No cash leaves the business at the point of import
- Import VAT and its recovery happen in the same VAT period
- You download a monthly PVA statement from your HMRC online account as evidence
To use PVA, you indicate it on the customs declaration. It is optional, but for most importers it is the more cash-efficient choice. For practical tactics, see our guidance on managing VAT cash flow .
Zero-rating exports
Goods you export out of the UK are normally zero-rated, meaning you charge VAT at 0%. Zero-rated is not the same as exempt: you still report the sale and you can still recover the input VAT on related costs.
Zero-rating is conditional. You must:
- Hold valid evidence of export (commercial and official documentation)
- Obtain that evidence within the time limit set by HMRC (typically within three months of supply)
- Ensure the goods actually leave the UK
If you cannot produce satisfactory export evidence, HMRC can treat the supply as standard-rated, leaving you liable for the VAT you did not charge. Robust record keeping for expenses and export documents is therefore essential.
VAT on services and place of supply
Services follow place of supply rules, which decide in which country the supply is taxed. For most business-to-business (B2B) services, the place of supply is where the customer belongs. So if a UK business sells services to a business overseas, the supply is usually outside the scope of UK VAT and no UK VAT is charged.
Business-to-consumer (B2C) services are more varied. The general rule places the supply where the supplier belongs, but there are many exceptions, including digital services, land-related services, and admission to events.
| Supply | Place of supply (general rule) | UK VAT treatment |
|---|---|---|
| B2B services to overseas business | Where customer belongs | Outside the scope of UK VAT |
| B2C general services | Where supplier belongs | UK VAT usually charged |
| Digital services to overseas consumers | Where consumer belongs | May need overseas registration |
| Land/property services | Where the land is | Taxed where the property sits |
Because the exceptions matter, always confirm the category before deciding the VAT treatment.
Reverse charge on overseas services
When a UK business buys services from a supplier outside the UK, the reverse charge usually applies. Instead of the overseas supplier charging VAT, you account for it yourself: you add the VAT as output tax and, where recoverable, reclaim the same amount as input tax on the same return.
For a fully taxable business the reverse charge is normally VAT-neutral, but it must still be recorded correctly because it affects your turnover for the VAT registration threshold and your return figures. Common examples include overseas software subscriptions, consultancy, advertising and professional fees.
EORI numbers and customs
To move goods across the UK border, a business generally needs an EORI number (Economic Operators Registration and Identification number) starting with GB. Without one, goods can be held at the border.
Key customs essentials:
- Apply for a GB EORI before importing or exporting goods
- A separate XI EORI may be needed for Northern Ireland movements
- Goods need the correct commodity code to determine duty and VAT
- A customs declaration is required, usually handled by a freight agent or customs broker
- Keep copies of all declarations, C79 certificates and PVA statements
Record keeping for international trade
Under Making Tax Digital for VAT, your records must be kept digitally and your returns filed through compatible software. For international trade, keep:
- Import documents, C79 certificates and PVA statements
- Export evidence for every zero-rated supply
- Reverse charge calculations and supporting invoices
- Customs declarations and commodity codes
- Currency conversion records where invoices are in a foreign currency
HMRC generally requires VAT records to be retained for six years. If you sell goods online across borders, the moving parts multiply quickly, so our ecommerce accounting guide covers marketplace VAT and overseas sales in more depth.