What is a duty deferment account?
Duty deferment is the main payment method for customs, import VAT and excise duty.
if you import goods on a regular basis, a duty deferment account gives you the possibility to make one payment a month through your Direct Debit, instead of paying for the individual shipments.
For more information on how to find out if you are eligible and apply for one, please see GOV.UK.
How does it work?
Once your application for a duty deferment account is approved by HMRC and your direct debit is effectively arranged, you'll receive a deferment approval number (DAN). This DAN is to be referenced on all import declarations and for the removal of goods from an excise warehouse. The payment for customs duty and import VAT is usually taken on the 15th day of the following calendar month. This date also applies to excise registered consignees. Excise payments are normally taken on the 29th of the following month.
Every Duty Deferment Account (DDA) comes with a deferment limit, which sets a maximum cap on the amount you can defer each month. Depending on your circumstances, you might be required to obtain a guarantee to maintain a DDA.
What is a guarantee and when do I need one?
You may need to provide a guarantee for duty deferment covering two months’ liabilities if you’re not eligible for a waiver. You will also need to be able to arrange a Direct Debit instruction from a UK bank.
When applying for a Duty Deferment Account (DDA) in Great Britain, you might qualify for a guarantee waiver under certain conditions:
You can defer customs duty, import VAT, and excise duty up to £10,000 per month without needing to provide a guarantee if your business is financially stable and has no history of significant non-compliance.
If you wish to defer amounts exceeding £10,000 per month, you can qualify for a full guarantee waiver only if you meet the above criteria and possess adequate resources to cover the entire deferred amount. However, you might still be eligible for a partial waiver if you don't meet all the requirements for a full waiver.
If you don't meet the criteria for a guarantee waiver, you can still obtain approval to use duty deferment by providing a guarantee. Additional information on guarantees can be found on the GOV.UK website.
What are the benefits of a duty deferment account?
Owning a duty deferment account presents the benefit of delaying payment by 2-6 weeks, facilitating faster clearance for your goods. With substantial sums often due on imported items, even a brief deferral can notably enhance a business's cash flow. As HMRC does not impose interest charges, you essentially gain up to 6 weeks of interest-free credit. This also aids in streamlining the importation process, preventing delays in goods awaiting payment.
However, if your aim is to defer VAT, using Postponed VAT Accounting may be more beneficial as you can account for your import VAT on your VAT returns, instead of paying it immediately or on a duty deferment account.
Can I use my broker’s Deferment Account?
If you prefer to have a customs agent manage declarations and duty deferment for you, it's essential to authorize them to utilize your deferment approval number (DAN). If you are using the Customs Declaration Service (CDS), you have the option to directly manage your standing authorities through the CDS Financial Dashboard and your Customs Financial Accounts.
Do you need further support?
Should you need guidance on completing declarations or advice on submission procedures, our team is ready to assist. Check our Chamber Customs clearance services or reach out to them via email at chambercustoms@gmchamber.co.uk.
With upcoming new VAT Regulations coming up which are likely to impact UK Traders, we encourage members and customers to start understanding and preparing now. We work with partners who specialised in unique VAT solutions and can support you cross-borders. If you are interested, you can request a complimentary 1-2-1 by emailing us at exportbritain@gmchamber.co.uk
Unsure if your business has strong compliant processes and systems in place? With new BTOM controls coming into place, especially affecting imports into the UK, we may see a rise in HMRC audits to traders. If you want peace of mind and stay ahead of the game, our team can conduct ‘customs audits’. From documentation to processes and more, our team can provide insight on key areas you need to improve or simply confirm your existing processes are robust enough. Contact our team at exportbritain@gmchamber.co.uk or call at 0161 393 4314.