If you’re importing goods into the UK from specific parts of the globe then you will need to pay import vat whenever 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 check vat number along with certain activities such as gambling are subject to excise duties while almost all other imports come under customs duties and import vat according to the goods and also 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 sent 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 may 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 country of origin itself before being imported into the UK. You may also offset this vat against sales vat if the goods that you’ve imported are sold in the local UK market. Countries like the UK and Italy also offer special vat deferment schemes where one can get relief from import vat for up to a month by filing out a special vat form with the hmrc and opening of a special vat deferment account with them. This move would help safeguard your cash flow.
Once you start selling your goods or services from your 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 and also 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 rates are the same as sales vat rates of similar products available in the United Kingdom. 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. The second is the reduced vat rate of 5% whilst the third is zero vat rate. There’s also certain goods and services which are totally exempt from the vat.
You ought to have sufficient knowledge on various duties and taxes applicable on imported goods to the UK so that you can calculate the costs on an accurate basis. You should employ all legal avenues to reduce your costs such as vat refunds, vat deferments, etc to enable you to lower your costs further and enhance the income of your business. You should diligently pay import vat whenever 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.