Import VAT

Health Check Service

Import VAT Compliance Audit and Health Check

HMRC can review imports declared up to three years prior to any audit, so UK importers must ensure they have the correct documentation and processes in place.

It is critical that businesses understand Import VAT rules to avoid penalties and delayed shipments.

What is Import VAT?

When your business receives shipments from overseas suppliers, depending on the contracted Incoterms, there is an Import VAT liability to consider and necessary procedures to guarantee that import VAT is claimed back. Import VAT is normally charged at the same rate as if they had been supplied in the UK. However, if your business imports works of art, antiques and collectors’ items, these will be entitled to a reduced rate of VAT.

It can be challenging for established businesses to determine whether their long-standing Import VAT processes and procedures are still current and compliant. If your business inadvertently fails to comply with UK Import VAT regulations, you may be required to make retroactive corrections, which could result in fines.

We can ensure Import VAT compliance so that your business can avoid VAT fines and penalties.

Import VAT Requirements and Penalties

HM Revenue and Customs (HMRC) states that they must be notified of any goods that your business is intending to import into the country and they will ensure that any VAT and customs taxes have been paid appropriately by checking them at the border. If Import VAT has not been paid, the goods may be impounded.

HMRC states that Import VAT is VAT chargeable and paid on goods imported from outside the UK and is treated under VAT law as if it were a customs duty. It is calculated and paid based on the information provided in the import documentation. Penalties for inaccuracies in the amount of import VAT declared are charged under Part 3 of the Finance Act 2003. Part 3 of the Act gives HM Treasury the power to prescribe where a breach of a requirement imposed by or under certain specified tax legislation makes a person liable to a civil financial penalty, up to the maximum amount set out in Section 26 of the Act.

Subject to the usual rules, import VAT is recovered as input tax on VAT returns. If a taxpayer overclaims, or claims too early, an amount of import VAT as input tax on a VAT return, any penalties for that inaccuracy would fall under Finance Act 2003 Schedule 24.

Making a claim to recover Import VAT when your business doesn’t own the products is likely to be rejected by HMRC. Since the regulations are quite clear, the only person with the legal right to recover import VAT is the owner of the goods. There is an increased risk of HMRC investigations concerning the recovery of Import VAT.

Import VAT Compliance Health Check

At ICS Global Services, we can conduct a "health check" on your imports to assess your present procedures, pinpoint any adjustments that are required, and make recommendations for possible enhancements and VAT savings. The purpose of our health check is to evaluate your company's past and present Import VAT compliance to find and fix any issues that could reduce the likelihood that HMRC will issue fines.

We review several areas related to your importing and VAT activities, such as:

A comprehensive review of all your trade documents (purchase orders, sales invoices, import customs declarations and declared valuations)
Verification of VAT declarations to ensure all details are correct.
Import VAT payment methods, such as Deferment, Cash Accounting, Immediate Payments and Postponed VAT Accounting.
Checking your customs declarations and making the required amendments to guarantee compliance with VAT regulations.
Import VAT Certificates (C79) and Monthly Postponed Import VAT Statements (MPIVS) to ensure compliance with UK tax laws.
Recovery of Import VAT.

Our Import VAT Health Check

For all new clients, we offer a complimentary 30-minute consultation during which we will discuss your Import VAT, pinpoint areas for improvement, and help minimise the possible impact of any fines or penalties.

We assist businesses with international trade matters and ensure compliance with VAT regulations that apply to their imports.

Our Customs and Tax Services

Tax Compliance Blogs

Read our Tax Compliance Blogs to appreciate how we have identified areas where our clients could reduce costs, increase efficiency, and comply with HMRC.

Developing Countries Trading Scheme (DCTS)

By Ian Simmonds • July 28, 2023

The Developing Countries Trading Scheme (DCTS) came into force on 19 June 2023 and has now replaced the UK’s Generalised Scheme of Preferences (GSP). The Department for Business and Trade has stated that the DCTS is a simpler and more generous preferential trading scheme which has been designed to boost trade with developing countries in order to support their development.

Advance Valuation Ruling Service

By ICS Global Services Limited • July 27, 2023

Importers can use a new online service for an Advanced Valuation Ruling where HM Revenue and Customs will confirm the method used to calculate the declared import values are correct and this is legally-binding for 3 years.

Claiming Relief from Import Duties and Taxes

By Ian Simmonds • March 22, 2022

Duty and Tax Management. Importers do not always take full advantage of import procedures, such as Inward Processing (IP), which could reduce or eliminate duties and taxes altogether on imported goods.