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Delayed payment of import duty and VAT due to COVID-19 – update HMRC advice 12/05/2020

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Sean Turner

Sean Turner – VAT Specialist
DD: +44 (0)207 465 1908

Payment of VAT and duty is a cash flow burden on businesses, which HMRC recognised by introducing the VAT payment deferment facility during the current crisis, however, this did not cover import VAT and duty.  Over the Easter weekend, HMRC announced that deferral of import VAT and customs duty due on 15 April would be permitted and urgent action is required for those businesses wanting to take advantage. 

Duty deferment account holders

Businesses holding a duty deferment account, experiencing severe financial difficulty due to coronavirus, unable to make payment of deferred customs duties and import VAT on 15 April 2020, should contact HMRC in order to be approved to enter into an extended period to make full or partial payment, without having the guarantee called upon or their deferment account suspended. 

How to contact the Duty Deferment Office

The Duty Deferment Office should be contacted on 03000 594243 or by email – cdoenquiries@hmrc.gov.uk 

The COVID-19 helpline can also be used on 0800 024 1222.  Businesses will be asked to explain how coronavirus has impacted finances and cash flow.

Account holders will be able to use deferment accounts during the extended payment period agreed, unless a subsequent payment in that period has been defaulted, in which case HMRC may consider suspending the account.

The outstanding payment will not affect the deferment limit, so there will be no need to increase the guarantee to cover the outstanding payment.

Where HMRC agree to an extended payment period, interest will not be charged on the outstanding payments, provided they are paid in full by the agreed date.

What if a business does not hold a duty deferment account?

Registered importers paying cash, or an equivalent, should also contact HMRC to request an extension to the payment deadline, at the time the payment is due.  An explanation will also be required as to how coronavirus has impacted finances.  HMRC will consider requests and decide whether to agree additional time to pay.  Decisions will be on a case-by-case basis and can be refused.

If approved, the conditions, including length of time offered to pay, will depend upon the importer’s individual circumstances and may require a guarantee to be held, for the period of extension.  

Unfortunately, non-registered importers are not offered this facility.  For further information, the Customs Debt Policy inbox – custdebtrr.customspolicy@hmrc.gov.uk – must be contacted.

Potential to extend period to pay import VAT and customs duty on 15 May

cog and clock

We understand that importers facing severe financial hardship as a result of coronavirus, can contact HMRC for approval to arrange an extended period for full or partial payment of import VAT and duty due on 15 May, without the guarantee being called upon or authorisation withdrawn.

Where payment extensions were agreed for April, the Central Deferment Office should be emailed (cdoenquiries@hmrc.gov.uk) to confirm an extension is being requested for May, also indicating that the importer’s financial situation has not improved, or has worsened.

Importers can continue to use their deferment accounts during the agreed time to pay arrangement period, unless they default on an agreed payment in that period, in which case HMRC might consider suspending the account.  Deferment limits will not be affected, so there is no need to increase the guarantee.  HMRC will not charge interest where there is an agreed extended payment period. 

In requesting an extension to the payment period, importer’s will need to explain how coronavirus has affected finances and cashflow.

Where an importer uses the deferment account of a freight forwarder, HMRC can only agree extensions to the payment period with the account holder, but would expect this to be passed on to the importer, where the arrangement was agreed on the basis that the account holder was unable to secure payment from the importer.

Separate arrangements are available for deferred excise payments, via the Covid-19 helpline (0800 024 1222).

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Sean Turner

Senior VAT Manager

Sean Turner is a VAT Senior Manager based in Menzies London Central office supporting SME businesses with their VAT and corporate tax issues.