Delaying payment of import VAT and customs duties

By Tolley
Delaying payment of import VAT and customs duties

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Delaying payment of import VAT and customs duties
  • Duty Deferment Scheme
  • Who can defer payment?
  • What charges can be deferred?
  • How long are payments deferred for?
  • Procedure for applying to the deferral scheme
  • Using the deferment
  • Miscellaneous aspects

Duty Deferment Scheme

Import VAT and customs duty are normally payable at the time when goods are imported into the UK or released from a customs or excise warehouse, and must normally be paid before HMRC will release the goods into free circulation within the UK. However, providing certain criteria are satisfied, it is possible for authorised businesses to delay payment of import VAT and customs duties under the Duty Deferment Scheme. The charges are due on imports and certain home-produced or home-manufactured products.

HMRC Notice 101 ; IMPS03220; Customs Duties (Deferred Payment) Regulations, SI 1976/1223; SI 1995/2518, reg 121A; De Voil Indirect Tax Service V3.351A

The main benefits for a business having a deferment account are:

  • the business does not have to pay the import taxes immediately upon importation of the goods as the import taxes will be collected monthly via Direct Debit
  • goods will be cleared more quickly as HMRC will not collect import taxes at the time the goods are cleared for customs purposes

HMRC has announced that, during the disruption caused by the coronavirus (COVID-19) pandemic, importers who are experiencing difficulty in paying, whether immediately or by duty deferment, import duty, and VAT may request an extension to the date on which payment becomes due. For further details and discussion of the impact of coronavirus on VAT and taxes more broadly, see the Tolley COVID-19 Toolkit .

Who can defer payment?

The following importers can delay payment of import VAT via the Duty Deferment Scheme:

  • the importer
  • the owner of goods stored in a customs / excise warehouse or free zone in the Isle of Man
  • an agent (including a warehouse-keeper) who imports goods for importers or owners
  • importers who have a Deferment Approval

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