HMRC have published Revenue and Customs Brief 3 (2022): ‘Postponed VAT accounting and businesses registered under the Flat Rate Scheme’. This details how VAT on imports should be accounted for by VAT Flat Rate Scheme (FRS) users from 1 June 2022.


Rather than having to pay import VAT upfront when goods are imported, Postponed VAT Accounting (PVA) allows UK VAT registered businesses to declare and recover import VAT on the same VAT return.

Since the introduction of PVA on 1 January 2021, businesses operating the VAT Flat Rate Scheme (FRS) have included PVA imports in their FRS turnover subject to the flat rate percentage.

New guidance

For businesses operating the FRS and PVA, HMRC’s guidance has been updated for VAT return periods starting on or after 1 June 2022:   

  • The value of imported goods should be excluded from the FRS calculation.
  • The full amount of import VAT should be added to box 1 following the FRS calculation being performed.

This reflects the correct treatment under the legislation.

For VAT return periods starting before 1 June 2022, when accounting for import VAT on their VAT return under PVA, FRS users should continue to:

  • Include the total value of the imported goods in their flat rate turnover. 
  • Apply the appropriate flat rate percentage to the total.


Amounts that may have been due to HMRC had the correct treatment had been in place for periods starting before 1 June 2022 will not be collected by HMRC.


  • Will not be penalised in relation to those amounts.
  • Do not need to amend previously declared returns.

Where businesses have overpaid HMRC due to adopting the incorrect treatment, they may seek to recover the overpayment using the normal Error correction process.

Useful guides on this topic

Flat rate scheme
What is the VAT Flat Rate Scheme (FRS)? Who can apply? How do you apply? What are the rules? What are the rules for capital expenditure and pre-registration VAT? 

Flat Rate Scheme: Limited cost trader
From 1 April 2017 a new category of trader, a ‘limited cost trader’, with a Flat Rate Scheme (FRS) percentage of 16.5% applies to FRS users.

Correcting VAT errors
What are the VAT error correction time limits? Can you correct errors through the VAT return? Do you have to notify HMRC?

International goods
This guide only considers UK VAT. It does not address Customs duties or other indirect taxes and duties that might apply on goods. This guide also does not consider the position for Northern Ireland. 

External link

Revenue and Customs Brief 3 (2022): postponed VAT accounting and businesses registered under the Flat Rate Scheme

VAT Notice 733: Flat Rate Scheme for small businesses, section 6 (determining your flat rate turnover)

VAT Notice 700/12: How to fill in and submit your VAT Return, section 4 (filling in the return if you use a VAT Accounting Scheme)

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