If you’re importing goods into the UK from specific parts of the globe then you’ll 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 subject to local sales vat rules.
The hmrc has provided for 14,000 classifications of products and services which are subject to customs duties, excise duties and import vat. Most alcohol and cigarettes and tobacco products along with certain activities such as gambling are vat check governed by excise duties while almost all other imports come under customs duties and import vat depending on the goods and also the country from where 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 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 are a vat registered trader in the UK then you can make application for a vat refund when you have already paid vat on any goods in the nation of origin itself before being imported into the UK. You can also offset this vat against sales vat when the goods that you have imported are offered in the local UK market. Countries such as the UK and Italy also offer special vat deferment schemes where one can get relief from import vat for approximately a month by filing out a special vat form with the hmrc and opening of an special vat deferment account with them. This move would help protect your cash flow.
When you start selling your goods or services in the local market then you’ll also need to charge any local sales vat rate to your clients. You will have to make vat invoices that specifically mention vat rates as well as file regular vat returns. For those who 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 concentrate on expanding your enterprise while all relevant paperwork and payment of taxes and duties is handled in a efficient manner.
The import vat rate is the same as sales vat rates of similar products sold in the United Kingdom. The United Kingdom has 3 vat rate slabs. The very first is the normal vat rate of 17.5% which is slated to go up to 20% from January 4, 2011. The second is the reduced vat rate of 5% while the third is zero vat rate. There are also certain products or services that 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 charges with an accurate basis. You should use all legal avenues to lower your costs like vat refunds, vat deferments, etc so that you can lower your costs further and improve 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 employ the services of a competent vat agent to claim additional vat back.