UK import VAT duty deferment

The UK left the European Union on 31 January 2020. As part of its Brexit Withdrawal Agreement, it will remain inside the EU VAT regime until 31 December 2020. During this time, there will be no changes to UK VAT rules, treatment of transactions or filings. Read Avalara’s free 2020 Brexit guide for details on Brexit VAT and customs issues.

If a non-resident company wishes to import goods into the UK, ordinarily it should register for UK VAT, and pay the UK import VAT and the appropriate duties immediately on import.  It is also responsible for the appropriate customs duties.

The UK however offers an alternative, cash-flow friendly import VAT and duties deferment scheme.  This enables the importer to defer the VAT and duties to the following month.  It usually requires a bank guarantee, although there is a scheme to avoid this on the VAT element for regular importers.

Import VAT and duty deferment with guarantee

With the appropriate Deferment Account, any import VAT due is only paid on the 15th of the month following the month of import.  This means importers are delaying the cash payment of importers by an average of 30 days.

Guarantee required for VAT and duty deferment

Under EU VAT Directive rules, importers are required to provide some minimum guarantee for the deferment of import VAT and duties if they are not paid for at the time of importation.  In the UK, such guarantees must come from an approved bank, building society or insurance company.  They are supplied via form C1201. The guarantee must cover up to two months of the duties due.

Simplified import VAT accounting – no guarantee required

The VAT amount guaranteed under the Deferment Account can be eliminated altogether by applying for the SIVA (Simplified Import VAT Accounting) scheme.  This was introduced in 2003, to cut the import VAT due via the Duty Deferment System.

Importers can gain approval for SIVA at the same time as applying for their Deferment Account.

This scheme is not available to new importers as the UK's HMRC will require at least three years' 'clean' VAT compliance history.

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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