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Postponed VAT Accounting In Xero

It's pretty straightforward ...


Posted by Alison Mead on 01/03/2021 @ 8:00AM

A number of clients have asked me about using Postponed VAT Accounting (PVA) recently, so I thought I'd offer you some more information about it. If you are doing your bookkeeping in Xero and have a need to account for PVA on a transaction, you can follow these steps ...

Postponed VAT Accounting In Xero is pretty straightforward if you follow the steps below!

Postponed VAT Accounting In Xero is pretty straightforward if you follow the steps below!


Firstly to process postponed VAT, add a Domestic Reverse Charge expense tax rate in Xero. You can call it PVA or something similar. Transactions you apply the rate to are included in Box 1 and Box 4 of your VAT return.

To record the tax-exclusive amount of imported goods, create a bill with a zero-rated tax rate. The amount is included in Box 7 of your VAT return. Then, you can record the PVA amount as shown on your MPIVS statement, so create another bill with two line items:

  • On the first line, add the PVA amount and use your new PVA tax rate

  • On the second line, reverse the PVA amount by adding a negative line item. Use a zero-rated tax rate

In addition, the PVA adjustment feature can be used on your VAT return. The adjustment is automatically applied to Box 1 and Box 4 of the return, so you don't need to create a separate transaction for the PVA amount in Xero.

You can find your monthly postponed VAT accounting total in the Monthly Postponed Import VAT Statement you receive from HMRC.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01604 217365 and let's see how I can help you.

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About Alison Mead ...


Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.

She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.

Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.

You know what they say: if you want something done well ask a busy person!


01604 420057