Delaying payment of import VAT and customs duties

Produced by Tolley
Delaying payment of import VAT and customs duties

The following Value Added Tax guidance note Produced 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?
  • Group deferment
  • What charges can be deferred?
  • How long are payments deferred for?
  • Procedure for applying to the deferral scheme
  • The guarantee
  • Exceeding the guarantee limit
  • Can the guarantee be varied?
  • More...

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.

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

  1. 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

  2. goods will be cleared more quickly as HMRC will not collect import taxes at the time the goods are cleared for customs purposes

Who can defer payment?

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

  1. the importer

  2. the owner of goods stored in a customs / excise warehouse or free zone in the Isle of Man

  3. an agent (including a warehouse-keeper) who imports goods for importers or owners

  4. importers who have a Deferment Approval Number (DAN)

Businesses who want to open a deferment account must be:

  1. established in the EU

  2. have a good compliance record

  3. satisfy HMRC that they are sufficiently competent to operate such an account

Group deferment

One approval can cover a group of companies providing that they are in a VAT group. Businesses wishing to apply for a group approval need to contact HMRC’s Central Deferment Office (CDO) at the address below.

What charges can be deferred?

Businesses importing goods into the UK can delay payment of the following charges if they have a valid deferment account. It should also be noted that businesses can also defer any deposits paid in respect of these charges as well:

  1. import VAT can be deferred where the import VAT is payable at the time

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