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Duty deferment for imports into the UK in 2021

5 November 2020

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Import VAT, customs duty and excise duty if due, is payable at the time of import of goods into the UK from outside the EU in 2020.

Importers can choose to either pay these duties and taxes immediately to their freight agent, who will pass onto HMRC, or alternatively they can apply for a deferment account number (DAN).  A DAN allows payment to be made once a month by direct debit.  The payment date is 14 days after the period end, so the maximum deferral time is 6 weeks and the minimum is 2 weeks.  As a default, each DAN must be supported by a bank guarantee for twice the monthly deferment limit, and such a guarantee for importers with a large VAT and duty bill is expensive.  There are schemes for VAT and excise duty to reduce the need for a guarantee if the importer is solvent and has a good compliance record with HMRC.

Once the Brexit transitional period ends on 1 January 2021, import VAT will not longer be due at the time of import, replaced by postponed accounting, which will significantly reduce the amount of tax to be deferred. 

Additionally from 2021, HMRC announced a new simplified scheme for importers to request waivers of bank guarantees for duty deferment accounts.  These accounts in 2021 will defer customs duty and excise duty only, not VAT.  The waiver scheme will still require a good compliance record and evidence of solvency, but the impression given by HMRC in their initial announcement is that it will adopt a lighter touch compared to the existing waiver scheme.  More details were promised by HMRC in November 2020.