Import Finance

5. VAT and Duty

Unless buying on delivered-duty-paid terms, importers are generally responsible for arranging customs clearance and paying any VAT and duty.

5.1 Import VAT of 17.5 per cent is raised on all imports of standard-rated goods.

You need only account for VAT for goods acquired within the EU. You account for input tax as soon as you take possession of the goods.

For goods imported from outside the EU, import VAT must be paid before goods are released by Customs. You also need to pay VAT on any import duty. However, there are certain ways of deferring payment:

• If you import regularly, you can operate a deferment account, settling your VAT on a rolling basis.You will require a bank guarantee.
• If you need to store the goods before selling them on, you can store them in a customs warehouse.VAT (and duty) only become payable when the goods leave the customs warehouse.
• If you intend to re-export the goods after processing them, you can apply for Inward Processing Relief (IPR).VAT (and duty) only become payable if you decide to sell the goods in the UK, or if you fail to meet the conditions of IPR.

5.2 You may be required to pay import duty.

• There is no duty on goods that are in 'free circulation' within the EU.Goods are in free circulation if they originate from an EU country, or have already been imported, all customs charges paid, into an EU country.
• For goods that are imported from outside the EU, the rate of duty will depend on the product and the country of origin.Rates of duty can vary suddenly and without warning, and can have a significant effect on the value of goods.