People often complain that when they import into the UK from outside Europe they are hit with a big import tax bill. This dramatically affects the cashflow of their business.
But when I press them, they do not know that the UK government has a scheme in place called the Duty Deferment Scheme (DDS) which assists them in overcoming this challenge.
To be part of this scheme you will to apply to HM Revenue and Customs (HMRC) for a Deferment Approval Number (DAN)
You can apply for deferment approval if you are
- an importer
- an owner of goods in warehouse or free zone
- an agent (including warehouse keepers) who enter goods for importers or owners
- you do not have to be VAT registered to apply for approval
The benefits to an imported for getting a DAN account is
- Delay paying the charges for an average of 30 days – better cash flow
- You can settle a month’s charges with a single payment using the convenience of direct debit instead of pay immediately each time you want to clear your goods
- Your goods are cleared more quickly as revenue do not have to handle payments for each transaction.
You can defer charges for between 2 and 6 weeks – an average of 30 days credit
- The charges you defer during 1 calendar month (the accounting period) must be paid as a total sum
- on the 15th of the next month
- if the 15th is not a working day, on the next working day after it.
You will make one direct debit payment for the total amount due; no other method of payment is accepted,
To use the DDS, you must give HMRC a financial guarantee from your bank, building society or insurance company that you can meet the cost of any VAT and duties due on imported goods at any time.
HMRC can reduce the amount of the guarantee so you only have to cover customs and excise duties, and not VAT. The Simplified Import VAT Accounting (SIVA) scheme does this.
To use SIVA, you must be VAT registered and meet certain other conditions. You’ll still have a maximum deferment limit each month, but your guarantee will only have to cover the amount of duties you defer. You’ll be able to defer the VAT without having to provide any security.
For further information please visit the following pages:
UK – Duty Deferment Scheme
UK – Reducing deferment Guarantees to HMRC
https://www.gov.uk/vat-and-import-duty-reducing-financial-guarantees