Importing and Exporting - Duties, VAT, C79 and all you need to know

Importing and exporting. Duty and C79. It can all seem like a different language, but you need to be clear about these terms if your business is importing to or exporting from the UK.

Import and export come with corresponding VAT and duty rules. As business owners dealing with import and export, you must ensure that you pay the right amount of VAT, import duties, and other charges. It is crucial to adhere to these rules and procedures when dealing with international trade.

The government taxes international shipments from other countries to control the flow of certain products, raise revenue, and protect the local economy. As a trader, you are responsible for knowing the different customs taxes and charges, so your business can run smoothly.

What are the Types of Import Duties?

Businesses that import goods from other countries need to pay Customs Duty, excise duties, and VAT. 

VAT

You pay VAT on goods sent from non-EU countries if they are gifts worth more than £39 or other goods exceeding £15. You also pay VAT for imported alcohol, tobacco products, and fragrances of any value.

The HMRC charges you the VAT rate applicable to your imported product. The rate is based on the total value of the product and includes the price of the goods, postage, packing, insurance, and duties owed.

Customs Duty

You are charged customs duty on goods sent from other countries if the parcel's total value (price, postage, packaging, and insurance) exceeds a certain amount.

Under £135: no charge

Gifts worth £135-£630: 2.5% or lower

Gifts above £630 & other goods above £135: rate depends on the type of goods and the place they came from

Excise Duty

Excise duty applies to imported alcohol or tobacco products, regardless of whether it is a gift or not. 

If you receive large quantities of alcohol and tobacco products for your business, use the Trade Tariff to check your duty rates.

Failure to pay the excise duty may cause your goods to be seized. Moreover, customs will hold your goods if they don't pass inspection, such as alcohol products over 350ml without a UK duty stamp or cigarettes/hand-rolling tobacco without UK health warnings or fiscal marks.

How Do I Pay Import Duties?

Paying at a Later Date 

A duty deferment account allows importers or representatives to make a one-time monthly payment on customs or tax charges through Direct Debit instead of paying multiple individual consignments. You should apply for a duty deferment account if you import goods regularly. You can delay paying the charges for an average of 30 days, and HMRC can clear your goods more quickly. 

Anyone can apply for a duty deferment account. If you are a trader established in the UK, you can also apply for a guarantee waiver approval. 

Checklist to apply for a duty deferment account: 

• EORI (Economic Operators Registration and Identification) number 

• name associated with your EORI number

• registered company number, if applicable. If in the UK, this will be from Companies House.

• UK address associated with your EORI number

• correspondence address

• VAT number, if this applicable

• company directors' and officials' details, including date of birth

• the person responsible for customs authorisations, their details, and customs experience

• your estimated debt

Those applying for a guarantee waiver should also prepare:

• records of any incident when your business did not follow customs or tax rules in the last three years

• financial records

Apply for a duty deferment account

Apply for a guarantee waiver approval

If you are established outside the UK, you cannot apply for a guarantee waiver approval. Instead, you can guarantee the deferment of your payment to HMRC using form C1201.

Where do I get a copy of my duty deferment statement?

You can get a copy of your duty deferment statements online. Remember to create a Government Gateway user ID and password first. Once you get your user ID, you can access 

Customs Handling of Import and Export Freight (CHIEF) or Customs Declaration Service to get your statement, depending on which service you use. Both of these services allow you to view, print, and download your statement. 

If you use CHIEF, you can get a statement by registering for Duty Deferment Electronic Statements (DDES). 

If you use Customs Declaration Service, you will get an email notification once your statement is ready. 

Read more here: Guide to getting your duty deferment statement online.

Paying when the Goods Arrive

CHIEF System

You can use the Flexible Accounting System to pay by cash, card, cheque, or bank transfer. The same is true for Direct Input Trader (DTI) agents who process import entries through a computer terminal linked to CHIEF.

The flexible accounting system works like a bank current account, minus the charges, overdraft facility, and interest.

Customs Declaration Service

You can use cash accounting to pay the import charges if you use the customs declaration service. You can also pay through online or telephone banking, CHAPS (Clearing House Automated Payment System), and BACS.

What is the C79 Import VAT Certificate?

Businesses registered for UK VAT should get a C79 import VAT certificate every month. The import VAT certificate is official evidence that you paid VAT on imported goods. It would help if you had this for later to reclaim the VAT as input tax. 

If you used CHIEF in making customs declarations, you would receive your C79 through the post. If you used the Customs Declaration Service, you could access your C79 online by logging into your Government Gateway account. The C79 should be available monthly. 

Example C79 Certificate from gov.uk

Setting Up Your Business for Imports

If your business regularly deals with imports, you need to set it up to get the goods through customs. Most companies hire a transporter or customs agent to handle the import declaration and clearing. Here are just a few requirements and processes that can make clearing customs easier and quicker for your business.

EORI Number

Before getting anything cleared through customs, you must first have an EORI (Economic Operators Registration and Identification) number. It is essential to use the correct EORI number; otherwise, the VAT you paid may end up in another person's Certificate. Moreover, businesses that frequently use incorrect EORI numbers can be fined or even prosecuted.

Traders need an EORI number if they move goods between: 

• Great Britain or the Isle of Man and any other country (including the EU)

• Great Britain and Northern Ireland

• Great Britain and the Channel Islands

• Northern Ireland and countries outside the EU

There are also several reasons you will need an EORI number even if your business is not established in the country you're importing or exporting from. Read more about that here.

If you're buying or selling goods for personal goods, you don't need to register for an EORI number.

Other useful links:

Get an EORI Number 

Check which EORI Number You Need

EORI Number Validation

Remember to use the correct EORI number when declaring your import. That way, you can reclaim the VAT paid as your input tax in your VAT return.

Simplified Declarations for Imports

When your goods arrive in the UK, you may be able to make a simplified declaration for your imports. There are different types of simplified declarations, which have additional requirements before you can use them. 

Guide to Using Simplified Declarations

Apply to Use Simplified Declarations

Authorised Economic Operator status

Authorised Economic Operator status is an internationally recognised quality mark. This shows that your business meets specific standards and criteria, which entitles it to enjoy additional benefits like receiving priority treatment for customs controls and a faster application process for customs simplifications and authorisations.

Apply for Authorised Economic Operator status

Getting a License or Certificate for Your Goods

You will need to register through the appropriate agencies if your business plans on importing goods such as plants or animals, firearms, medicine, or chemicals.

Here is the list of some agencies you need to register with to import goods :

• PEACH to import fresh produce, plants or plant products

• Animal and Plant Health Agency (APHA) to import 'prohibited' plants and plant parts/seeds, plant pathogens, invertebrate plant pests, soil and other organic material, and potatoes

• the Fish Health Inspectorate to import live fish or shellfish

• the Forestry Commission to import wood or wood products

• the Medicines and Healthcare Products Regulatory Agency to import human medicines

• Veterinary Medicines Directorate to import veterinary medicines

• the European Chemicals Agency (under the REACH regulations) to import chemicals

• the Department for International Trade to import controlled goods

You also need to arrange for a place where your imported goods can be inspected, submit import declarations properly, and pay VAT and duty before you can get the goods cleared.

For more details on the procedures of setting up your business for import, you can follow this step by step procedure. 

Failure to follow the proper procedures may result in the seizure of your goods. Customs will typically hold parcels for up to 3 weeks. If you haven't settled everything by then, they will send back your package.

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