As businesses are well aware, there will be situations where they need to make a payment to HMRC for money owed. This may be payments with regards to import VAT or customs duty. With the new customs software (known as customs declaration service) replacing CHIEF, it's important that your business understands all the options available for making payment of Customs Duty and VAT.
Through CDS, your business will have access to your financial dashboard which you'll have to take time to understand and ensure that you use it effectively and make payments before they fall due. Below we look at some of the payment options which are available for your business:
Duty deferment, cash and guarantee accounting:
Use a duty deferment account:
This option allows a business to make one payment a month via Direct Debit. As such, businesses delay paying charges for an average of 30 days and do not have to make immediate payment following every import.
HMRC state that the can generally clear goods quicker if a business uses a duty deferment account rather than making immediate payment because they do not have to handle payments for each transaction.
From a compliance perspective, businesses can obtain copies of their duty deferment statements which allows them to have a clear audit trail.
Also, under CDS, a business can make top-up payments to their account.
Cash accounting:
This is an option via CDS to pay for either customs duty or import CAT and replaces the old FAS system which was used under CHIEF.
The cash account allows a business to not only pay customs duty and taxes but to also withdraw funds if necessary.
Using a general guarantee account:
Businesses can use a general guarantee account to cover costs due at import. A business can even use multiple guarantees on the same account. A guarantee may be needed if you declare goods for temporary admission or the value of duty is unknown.
Postponed VAT accounting:
This option is only available for businesses to account for any import VAT which is due. PVA cannot be used by businesses to account for customs duty. There are big cash flow benefits to using PVA and this can be explored more in our article which focuses on the benefits of PVA.
Making and Immediate Payment:
There is always the option of making an immediate payment to HMRC. If a business wishes to use this method, they need to consider how much time is needed for the payment to reach HMRC.
Making this immediate payment can be done in a couple of different ways:
- Approve a payment through your online banking
- By Bacs, CHAPS, online or by telephone banking
- Payment by debit or corporate credit card (there is a fee if you pay by corporate credit card or corporate debit).
- By cheque
If you use customs intermediary to complete customs declarations on your behalf, make sure that you've authorised them to make the payment on your behalf. This is necessary if you use a deferment, cash or guarantee account. Without this authorisation, they will not be able to use the account on your behalf. The necessary person/ organisation can be provided access through your financial dashboard.
Regardless of how you account for taxes and duties, you should ensure that your customs intermediary is made aware prior to the movement of the goods. The customs documentation will have to be completed to reflect the payment method which you wish to use.
