Many businesses that bring goods into the UK from outside the EU operate deferment accounts, which allow payment of import VAT and duty to be delayed for 15 days after the month in which the goods are brought into the country. HMRC requires such accounts to be supported by a bank or insurance company guarantee. As payments to settle deferment accounts are not covered by the general deferral of VAT payments until 30 June, importers have been increasingly concerned that failure to abide by the terms of the account could mean that their account might be suspended and that HMRC may call on its guarantee to settle the unpaid duty. In light of the challenges faced by importers at this time, HMRC passed on the message below to the Chartered Institute of Taxation over the weekend for immediate action.
Duty deferment account holders
Duty deferment account holders who are experiencing severe financial difficulty as a result of coronavirus and who are unable to make payment of deferred customs duties and import VAT due on 15 April 2020 can contact HMRC for approval to enter into an extended period to make full or partial payment, without having their guarantee called upon or their deferment account suspended. The account holder should contact the Duty Deferment Office at 03000 594243 or by email firstname.lastname@example.org or the COVID-19 helpline on 0800 024 1222. Account holders will be asked to provide an explanation of how coronavirus has impacted their business finances and cash flow.
HMRC’s contact lines will be staffed over the bank holiday weekend.
Duty Deferment account holders will be able to use their accounts during the extended payment period agreed unless they default on a subsequent payment in that period, in which case HMRC may consider suspending their account. The outstanding payment will not affect their duty deferment limit so they will not need to increase their guarantee to cover the outstanding payment. Where HMRC agree to an extended payment period, interest will not be charged on the outstanding payments provided they are paid in full by the agreed date.
Duty/import VAT payments not covered by a duty deferment account
Registered Importers who pay cash or an equivalent and are facing severe financial difficulties as a direct result of coronavirus can contact HMRC to request an extension to the payment deadline at the time the payment is due. They will be asked to provide an explanation of how coronavirus has impacted on their business finances. HMRC will consider this request and decide whether or not to agree an additional time to pay. The decision will be taken on a case-by-case basis and could be refused.
If the request is approved the conditions, including the length of time offered, will depend upon the importer’s individual circumstances and may require the holding of a guarantee for the period of the time extension. We cannot offer this facility to non-registered importers. For further information, please contact the Customs Debt Policy inbox.
6 May update
HMRC has now confirmed businesses can also apply for a similar extension on the duty deferment payment due on 15 May 2020.
HMRC says that duty deferment account holders experiencing severe financial difficulties as a result of coronavirus, who are unable to make payment of deferred customs duties and import VAT due on 15 May, can contact them to arrange an extended period for making full or partial payment without having their guarantee called upon or their account suspended.
They will be asked to explain how coronavirus has impacted on their business finances and cash flow. Deferment account users who had a payment extension agreed for their April payment will be asked to confirm that their financial situation hasn’t changed, or has worsened.
Duty deferment users who had a payment extension agreed for their April payment should email the Central Deferment Office at email@example.com. All other requests can be made either via that email address or by phoning 03000 594 243 or the Covid-19 helpline on 0800 024 1222.
HMRC also says it will be reviewing the position for payments due in June, taking account of any coronavirus measures in place as we approach that payment date.
As with the April concession, this extension must be individually agreed with and approved by HMRC, so it is essential that importers act now by calling HMRC to agree a delay. It may be necessary to pause rather than cancel the direct debit, so it is also important to contact your bank to check the correct procedure.
For more information on the above, please contact