If you are importing goods into the UK from specific parts of the globe then you will 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 also the items are then subject to local sales vat rules.
The hmrc has provided for 14,000 classifications of goods and services which are subject to customs duties, excise duties and import vat. Most alcohol and cigarettes and tobacco products vat check along with certain activities like gambling are subject to excise duties while almost every 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 services or goods are brought in or delivered 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 when you import goods from non eu countries.
However, if you’re a vat registered trader in the United Kingdom then you can apply for a vat refund in case you have already paid vat on any goods in the country of origin itself before being imported into the UK. You can also offset this vat against sales vat when the products which you have imported are sold in the local UK market. Countries such as the UK and Italy 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 a special vat deferment account with them. This move would help safeguard your cash flow.
When you start selling your goods or services in the local market then you will also have to charge any local sales vat rate to your clients. You will need 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 should engage the services of an excellent vat and customs agent. This will enable 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 rates are exactly like sales vat rates of similar products available in the United Kingdom. The UK has 3 vat rate slabs. The very 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% while the third is zero vat rate. There are also certain goods and services that 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 charges 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 should diligently pay import vat when 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.