Payment Methods for Import Duties and VAT

Paying Import VAT and Duties

Paying the correct amount of VAT and Duty

Important VAT and tariff regulations and procedures apply when importing goods into the UK. Normally, the importer of record is responsible for clearing the goods through UK customs and paying any taxes. Depending on the Incoterms 2020 stated within the contract, the importer must ensure during customs clearance that they pay the correct amount of import VAT and duties via their import declaration.

What is import VAT?

What is import duty?

What is excise duty?

Payment Methods

Duty Deferment Account | Cash Accounting | General Guarantee Account | Immediate Payments | PVA

ICS Global Services - VAT and Duty Payments

How to pay Customs Duty, Excise Duties and VAT

Using a Duty Deferment Account

Importers can use direct debit to make one monthly payment for duties and VAT via a duty deferment account. Payments for individual consignments are not required. Importers can apply for a duty deferment account to delay paying most customs charges, such as customs duty, excise duty, and import VAT.

HM Revenue and Customs (HMRC) states that having a duty deferment account means:

Importers can delay paying duty and VAT charges for an average of 30 days.
Importers do not have to pay immediately each time they want to clear their goods.
HMRC can normally clear importers goods more quickly because they do not have to handle payments for each transaction.
Importers can get copies of your duty deferment statements.
When using the Customs Declaration Service, the importer can also make top-up payments in their deferment account.

Cash Accounting

Importers with access to the Customs Declaration Service can use cash accounting to pay for customs duty and import VAT when they make an import declaration. The cash accounts for Customs Declaration Service declarations replaced the old Flexible Accounting System within CHIEF.

HM Revenue and Customs (HMRC) states that by having a cash account, an importer will be able to:

Make a payment into their cash account.
Authorise a customs clearance agent to use the account on their behalf.
Pay import duties and taxes from the cash account, in order of when they made the declarations.
Withdraw funds from their cash account.
Review their account and manage who has permission to use their customs financial accounts.
Authorise customs agents and freight forwarders to use their cash account number when making an import declaration.

General Guarantee Account

An importer may need to provide a guarantee to cover amounts due on goods imported to the UK if the value of import duties is disputed, unknown, or if they declare the goods to Temporary Admission (unless the importer has full authorisation for Temporary Admission).

HM Revenue and Customs (HMRC) states that having a General Guarantee Account allows the importer to:

Provide multiple guarantees from the same account, rather than needing to provide separate guarantees.
Continue importing goods into the UK and pay the amount due later, once the amount is agreed.

Importers can use a General Guarantee Account to cover:

Import VAT
Customs Duty
Excise Duties
Amounts due under the UK Agricultural Policy
Anti-dumping or countervailing duties
Quotas

Immediate Payments

Importers can use immediate payment methods to pay what they owe. The importer will need a Customs Declaration Service Immediate (CDSI) reference number that they were given when they made their declaration. The reference number starts with the letters "CDSI," then it has 12 numbers and letters. There will be a different reference number for each declaration the importer makes when using the Customs Declaration Service.

Using Postponed VAT Accounting

Postponed VAT accounting lets the importer declare and recover import VAT on their VAT Return. There are substantial cash flow benefits for the importer when they include import VAT in their VAT return. Instead of having to pay import VAT up front and then recover it thereafter, the importer can disclose and recover it on the same VAT return. This process is referred to as delayed VAT accounting. If an importer does not use postponed VAT accounting, they will need a C79 VAT certificate to claim import VAT as input tax on your VAT Return.

ICS Global Services - Import and Export Advisor

What is Excise Duty?

Excise duty is payable in addition to any potential customs duty and import VAT, and the excise duty rate varies according to the type of product being imported. Products liable for excise duty could be either of UK origin or imported from outside the UK. Excise duty also applied to specific licences for activities (such as driving a car on public roads) and to other activities, such as gambling. Excise duty is often referred to as an ‘indirect tax’ because the end consumer does not usually see the amount of excise duty they are paying. In most cases, the manufacturer or importer pays the excise duty on the product rather than the end consumer. Excise duty is due at the time excise goods are released for consumption in the United Kingdom.

UK Businesses importing goods from an EU member state after Brexit (1 January 2021) must complete a customs declaration and use the relevant customs procedures when the goods arrive at the place of entry into Great Britain.

The main products that are liable for excise duty are:

Wine and other fermented products

Beer

Cider and perry

Spirits

Imported composite goods containing alcohol

Tobacco products

Hydrocarbon oil

Climate Change Levy

Biofuels

The recent Alcoholic Products (Excise Duty) Regulations 2023 and the Finance (No. 2) Act 2023 support the UK government's decision to restructure the taxation of alcohol.