If you are importing goods to the UK from specific regions of the globe then you’ll need to pay import vat whenever 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 products and services which are subject to customs duties, excise duties and import vat. Most alcohol and tobacco products along with certain activities like gambling are vat check subject to excise duties while almost every other imports come under customs duties and import vat depending on the goods and the country from which they arrive.
The hmrc has specified eu special territories where import vat will be levied if goods or services are brought in or sent to such territories. They 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 UK. This vat will also be levied whenever 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 to the UK. You may 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 respite from import vat for up to a 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 need to charge any local sales vat rate to the clients. You will need 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 a proficient vat and customs agent. This will allow 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 exactly like sales vat rates of similar products available in the UK. The UK has 3 vat rate slabs. The first is the normal vat rate of 17.5% which is slated to rise to 20% from January 4, 2011. The second is the lower vat rate of 5% whilst the third is zero vat rate. There are also certain products or services which are totally exempt from the vat.
You should have sufficient knowledge on various duties and taxes applicable on imported goods to the UK so that you can calculate the costs with an accurate basis. You should employ all legal avenues to lower your costs like vat refunds, vat deferments, etc so that you can reduce your costs further and enhance the cash flow of your respective business. You should diligently pay import vat when 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.