If you are importing goods into the UK from specific regions of the globe then you will have 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 goods are then governed by local sales vat rules.
The hmrc has provided for 14,000 classifications of products and services that are subject to customs duties, excise duties and import vat. Most alcohol and cigarettes and tobacco products along with certain activities like gambling are vat check governed by excise duties while almost every other imports fall under customs duties and import vat depending on the goods and also the country from which they arrive.
The hmrc has specified eu special territories where import vat will be levied if services or goods 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 whenever you import goods from non eu countries.
However, if you’re a vat registered trader in the UK you’ll be able to make application for a vat refund when you have already paid vat on any goods in the nation of origin itself before being imported into the UK. You can also offset this vat against sales vat if the products which you have imported are sold in the local UK market. Countries such as the UK and Italy also offer special vat deferment schemes where you can get respite from import vat for approximately one month by filing out a unique vat form with the hmrc and opening of an special vat deferment account with them. This move would help protect your cash flow.
When you start selling your services or goods in the local market then you will also need to charge the local sales vat rate to your clients. You will have to make vat invoices that specifically mention vat rates and also file regular vat returns. For those who have problem in understanding various duties and taxes imposed by the hmrc then you definately should hire the services of an excellent vat and customs agent. This will enable you to concentrate on expanding your business while all relevant paperwork and payment of taxes and duties is handled in an efficient manner.
The import vat rate is exactly like sales vat rates of comparable products available in the UK. The UK has 3 vat rate slabs. The very first is the standard vat rate of 17.5% that is slated to rise 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 products or 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 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 so that you can lower your costs further and enhance the income 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 a competent vat agent to claim additional vat back.