Delaying Payment of Duty and VAT during the Coronavirus outbreak

Posted 15.04.2020 in News by Sue Grewcock

The current Coronavirus outbreak is causing a lot of business to struggle with cashflow issues, orders being cancelled and having to close operations. But what about all those goods which are on route from a supplier that will arrive on a vessel soon and will need to be cleared through customs.

Shortage of staff and equipment at ports can mean that goods may be held for much longer and therefore potentially incurring demurrage charges for storage. There is no Government guidance for ports to waive those charges and so it would be reviewed by port operators on a case by case basis.

There are various ways of clearing goods through customs and certain Special Procedures may allow for deferment of import duty and VAT easing the burden on the business and its cash reserves.

Deferment Account – businesses operating a Deferment Account with HMRC pay for duty and VAT accumulated within a calendar month on the 15th day of the following month

Inward Processing – goods being imported for processing/repair/further manufacturing which will subsequently be re-exported can benefit from Inward Processing.  Authorisation by Declaration IP can be granted at the time of import, though security is required for the potential debt.  This can be in a form of cash payment, deduction from a Deferment Account or a Bank Guarantee.

Customs Warehousing – goods can be entered into a Customs Warehouse, whether a Public one operated by a freight forwarder or a Private one operated by the importer themselves. Duty and VAT may only become payable at the time of removal the goods from the procedure into Free Circulation. If goods are re-exported then no duty or tax would be due.

Transit – if goods entered to Free Circulation would be subsequently sold and moved to EU Member State, then using Transit Procedure could enable the importer in the UK to move the goods to the consignee in EU.  This can be achieved by using the T1 Transit Document and any duty or tax would be payable by the consignee in the EU Member State.

This may be the time to look at and assess your Supply Chain. If your cashflow is affected by the need to pay duty and VAT on arrival of goods, then talk to us and we may be able to help guide you down the best route of the various options available.

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