Import VAT Payment Options due to DDP Export to Great Britain
1) Immediate payment: VAT is due at the time of submission of the import declaration.
You can reclaim any import VAT on your next VAT return when you are registered for GB VAT number and if you have received import VAT Certificate from HMRC (can be downloaded). In terms of cashflow it is the most burdensome for the company.
Immediate payment can be paid:
- With corporate card
- Via bank transfer
- For above payments you need to wait until the goods are marked as arrived after the pre-lodged customs declaration, and Customs Declaration Service – CDS - generated a unique payment reference related to the actual declaration.
- CDS cash account. Using a CDS cash account the company needs to register for CDS with their UK EORI number:
- It can be top up:
- Bank transfer
- Online banking if you have a UK bank account
- From bank card
2) Duty Deferment Account:
- Own duty deferment account: traders, who import goods regularly, may benefit from having a duty deferment account (DDA) enabling customs charges to be paid once a month through direct debit instead of paying individual consignments. Need a UK bank account for the Company, enabling the payable amount to be debited after 30 days. To set up a DDA, traders apply for a deferment account number (DAN) and will need to be authorised by HMRC. Some cases HMRC request bank guarantee. Have a little benefit for company’s cashflow regarding the payment terms but it needs to pay attention to have enough money on the bank account.
- Using customs agent’s deferment account: Needs an authorisation from customs agent. You can agree in a couple of days payment terms, but the deferment account charges can vary. Some agents charge a percentage fee between 3-5% or a flat rate fee. For long term not a best option and incur extra cost.
3) Portponed VAT Accounting: Its usage is optional, you do not need to apply for it, but it should be mentioned in the customs declaration at the VAT payment method. VAT registered business can account for import VAT on their VAT return. This way allows business to declare import VAT and reclaim it as input tax on the same VAT return. You can use postponed VAT accounting as a non-established taxable person, too. Most favourable option regarding cashflow.
Please note, to use any option above, you need a GB VAT and EORI number.
VAT rates examples:
- Zero rated: applied to most food, books, newspapers and children’s clothes
- Reduced VAT rate (5%): sanitary products, children’s car seats
- Standard rate of VAT (20%): stationary, furniture, sweets, etc…
The company NIETSCH Ltd, through its English partner, offers its support in delivering your export with DDP terms, as follows:
DDP (Delivered Duty Paid) bookkeeping package:
Fee £ 500+VAT/month
- GB VAT registration
- Application for EORI number
- Cloud based bookkeeping software subscription fee
- VAT bookkeeping
- preparing and filing VAT report
- and representing the company as an authorised agent to HMRC
DDP (Delivered Duty Paid) package with customs clearance:
Fee £ 1100+VAT/month
- the above-mentioned bookkeeping package
- and customs clearance and consultancy up to 5 import declarations a month
Import - export contact
For import-export consulting, contact Tamás Nietsch at the following contact details: