If you’re importing goods to the UK from specific parts of the globe then you will need 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 hm revenue and customs department on the port or airport itself and also the items are then subject to local sales vat rules.
The hmrc has provided for 14,000 classifications of goods and services that are subject to customs duties, excise duties and import vat. Most alcohol and tobacco products together with certain activities like gambling are subject to excise duties while almost all other imports come under customs duties and import vat according to the goods and the country from which they arrive.
The hmrc has specified eu special territories where import vat is going to 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 The Channel Islands in the United Kingdom. This vat will also be levied when you import goods from non eu vat registration number countries.
However, if you are 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 can also offset this vat against sales vat when the goods that you’ve imported are sold from our UK market. Countries like the UK and Italy also offer special vat deferment schemes where you can get relief from import vat for up to 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.
Once you start selling your services or goods in the local market then you will also have to charge the local sales vat rate to your clients. You will need 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 an excellent vat and customs agent. This may allow you to concentrate on expanding your enterprise while all relevant paperwork and payment of taxes and duties is handled in an efficient manner.
The import vat rates are exactly like sales vat rates of comparable products sold in the UK. The United Kingdom has 3 vat rate slabs. The first is the standard vat rate of 17.5% that is slated to go up to 20% from January 4, 2011. Second is the reduced vat rate of 5% while the third is zero vat rate. There are 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 to enable you to calculate the costs with an accurate basis. You should use all legal avenues to reduce your costs such as vat refunds, vat deferments, etc so that you can reduce your costs further and improve the cash flow 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 an efficient vat agent to claim additional vat back.