If you’re importing goods into the UK from specific parts of the globe then you will need to pay import vat when you import goods from eu special territories as well as from non eu countries. This tax is collected by the hmrc vat department or hm revenue and customs department on the port or airport itself and the goods are then governed by local sales vat rules.
The hmrc has provided for 14,000 classifications of products and services which are governed by customs duties, excise duties and import vat. Most alcohol and tobacco products check vat number together with certain activities such as gambling are subject to excise duties while almost every other imports come under customs duties and import vat according to the goods and the country from which they arrive.
The hmrc has specified eu special territories where import vat will be levied if services or goods are brought in or sent to such territories. Those are the French Overseas Departments of Guadeloupe, The Canary Islands in Spain, The Aland Islands in Finland, French Guiana, Mount Athos and Reunion and Martinique in Greece, and The Channel Islands in the United Kingdom. This vat may also be levied whenever you import goods from non eu countries.
However, if you’re a vat registered trader in the UK then you can make application for a vat refund in case you have already paid vat on any goods in the nation of origin itself before being imported to the UK. You can also offset this vat against sales vat when the products which you’ve imported are offered from our UK market. Countries such as the UK and Italy also offer special vat deferment schemes where one can get relief from import vat for up to one month by filing out a unique vat form with the hmrc and opening of a special vat deferment account with them. This move would help protect your cash flow.
Once you start selling your goods or services in the local market then you’ll also have to charge the local sales vat rate to the clients. You will have to make vat invoices that specifically mention vat rates as well as file regular vat returns. If you have problem in understanding various duties and taxes imposed by the hmrc then you definately should hire the services of an excellent vat and customs agent. This may enable you to concentrate on expanding your business while all relevant paperwork and payment of taxes and duties is handled in an efficient manner.
The import vat rates are the same as sales vat rates of similar products available in the UK. The UK has 3 vat rate slabs. The very first is the standard vat rate of 17.5% which is slated to rise to 20% from January 4, 2011. Second is the lower vat rate of 5% while the third is zero vat rate. There are also certain products or services which are totally exempt from any vat.
You ought to have sufficient knowledge on various duties and taxes applicable on imported goods to the UK to enable you to calculate the costs on an accurate basis. You should use all legal avenues to lower your costs like vat refunds, vat deferments, etc to enable you to reduce your costs further and improve the cash flow of your respective business. You need to diligently pay import vat whenever you import goods from eu special territories or from non eu countries and use the expertise of a competent vat agent to claim additional vat back.