UK import VAT duty deferment
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.
Latest British news
March 5, 2019
HMRC estimates that 245,000 businesses buy and sell goods with other EU27 states. When the UK leaves the Customs Union, 29 March, all movements of goods must be declared for customs, tariffs and VAT. This requires an EORI number (Economic Operator Registration Identification), which is shown on customs declarations etc.
March 1, 2019
HMRC is writing to thousands of UK, US and other international sellers of digital services to warn them to now VAT register in another EU state in readiness for a no-deal Brexit. This covers their sales of e-services, apps, streaming media, online gaming and dating, e-books and software to EU consumers.
February 14, 2019
The UK’s HMRC has opened the registration portal for foreign delivery companies to register post-Brexit VAT on consumer good parcels below £135. This new regime will be triggered under the current default no-transition deal Brexit on 29 March 2019.
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