If you are importing goods into the UK from specific regions of the world then you will 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 at the port or airport itself and the items are then subject to local sales vat rules.
The hmrc has provided for 14,000 classifications of goods and services which are governed by customs duties, excise duties and import vat. Most alcohol and cigarettes and tobacco products along with certain activities such as gambling are subject to excise duties while almost every other imports fall under customs duties and import vat according to the goods and also the country from where they arrive.
The hmrc has specified eu special territories where import vat will be levied if goods or services are brought in or delivered 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 will also be levied whenever you import goods from non eu vat registration number countries.
However, if you’re a vat registered trader in the United Kingdom then you can apply 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 if the products which you’ve imported are sold in the local UK market. Countries like the UK and Italy also offer special vat deferment schemes where you can get relief from import vat for approximately one 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 from your market then you will also need to charge the 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 should engage the services of a proficient vat and customs agent. This may allow you to focus on expanding your business 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 comparable products sold in the United Kingdom. The UK has 3 vat rate slabs. The very first is the standard vat rate of 17.5% that is slated to go up to 20% from January 4, 2011. The second is the lower vat rate of 5% while the third is zero vat rate. There’s also certain goods and services that are totally exempt from any vat.
You should have sufficient knowledge on various duties and taxes applicable on imported goods into the UK so that you can calculate the charges with an accurate basis. You should employ all legal avenues to reduce your costs like vat refunds, vat deferments, etc to enable you to reduce your costs further and improve the income 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 employ the expertise of a competent vat agent to claim additional vat back.