If you are importing goods to the UK from specific parts of the globe then you’ll have to pay import vat when you import goods from eu special territories or even from non eu countries. This tax is collected by the hmrc vat department or the hm revenue and customs department on the port or airport itself and the items are then governed by local sales vat rules.
The hmrc has provided for 14,000 classifications of goods and services that are governed by customs duties, excise duties and import vat. Most alcohol and tobacco products vat check along with certain activities like gambling are governed by excise duties while almost all other imports come under customs duties and import vat depending on the goods and the country from where they arrive.
The hmrc has specified eu special territories where import vat is going to 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 also the Channel Islands in the United Kingdom. This vat may also be levied when 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 into the UK. You may also offset this vat against sales vat if the products which you have imported are sold from our UK market. Countries like the UK and Italy also offer special vat deferment schemes where you can get respite from import vat for approximately a month by filing out a unique vat form with the hmrc and opening of an 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 need to charge the local sales vat rate to your clients. You will have to make vat invoices that specifically mention vat rates and also file regular vat returns. If you have problem in understanding various duties and taxes imposed by the hmrc then you definately should engage the services of a proficient vat and customs agent. This may enable you to focus 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 comparable products sold in the United Kingdom. The UK has 3 vat rate slabs. The first is the normal vat rate of 17.5% that is slated to rise to 20% from January 4, 2011. Second is the reduced vat rate of 5% while the third is zero vat rate. There’s also certain goods and services which are totally exempt from any vat.
You should have sufficient knowledge on various duties and taxes applicable on imported goods to the UK so that you can calculate the charges on an accurate basis. You should employ all legal avenues to lower your costs such as vat refunds, vat deferments, etc so that you can reduce your costs further and enhance the cash flow of your business. You should diligently pay import vat whenever you import goods from eu special territories or from non eu countries and use the services of a competent vat agent to claim additional vat back.