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Brexit customs, excise duty and VAT deferment account opportunity

  • Oct 28, 2020 | Richard Asquith

As the UK prepares to leave the EU Customs Union and VAT regime, goods being imported into the country from the EU will become liable to duties and VAT. A Brexit free trade deal with no goods tariffs or quotas was announced 24 December 2020.

When goods are imported into the UK from EU, for the first time they will be liable to customs declarations and import VAT. It is possible to apply to HMRC for a Duty Deferment account which can postpone the payment of customs duties and VAT until month end. The bill for all the month’s imports is then settled by bank Direct Debit. You may alternatively use the Postponed Accounting scheme to avoid import VAT payments altogether.

To obtain this deferment, you will need to provide a guarantee. There are varying types: individual for small number of movements; or comprehensive guarantee for large numbers of movements.

UK relaxes Duty Deferment account guarantee for Brexit

The UK has recently confirmed it will relax the expensive comprehensive guarantee requirement from 1 January 2021 to help cushion the effects Brexit. This is done though a guarantee waiver application. The individual guarantee will come with no cost. For most businesses this will mean you can apply for a guarantee waiver and, subject to compliance and solvency checks, means you will not need to provide a guarantee. If you already hold a duty deferment account you can also apply for a guarantee waiver for this account.  There are two schemes:

  • approval for a guarantee waiver to defer customs duty, import VAT and excise up to £10,000 per month
  • approval for a guarantee waiver to defer customs duty, import VAT and excise up to a specified amount over £10,000 per month

Non-resident businesses will be able to apply for a Duty Deferment Account from 2021, but will have to provide a financial guarantee.

Explore more content like this in our Brexit hub


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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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