COVID-19: Delays in Import Duty / VAT and DIT Support to Exporters and Investors
Our latest business support blog goes through the Delays in Import Duty and VAT, and the DIT Support for exporters and investors.
Delaying Import Duty / VAT Payments As A Result Of COVID-19
Many businesses that import 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. See Gov.uk to find out how to set up a deferment account.
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. Considering the challenges faced by importers at this time, HMRC have stated that:
“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.”
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 Covid-19, 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 Covid-19 has impacted on their business finances. HMRC will consider this request and decide whether to agree on 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. They do not offer this facility to non-registered importers. For further information, please contact the Customs Debt Policy inbox at: email@example.com
The Department For International Trade (DIT) Offers Support To Exporters And Investors
The Department for International Trade has outlined support available to 160,000 exporters and UK businesses that are now eligible to secure export insurance cover to major international markets.
Guidance on how to help secure export finance to keep trading during the coronavirus outbreak has been set out by the government in direct communication to 160,000 exporters and investors.
As well as advice on what financial support is available for companies to manage the impacts of coronavirus, DIT stands ready to provide assistance with customs authorities to ensure smooth clearance of businesses’ products, and to offer advice on intellectual property and other issues with business continuity.
The message follows the news that UK businesses will now be eligible to secure export insurance cover to markets including the EU, US, Japan, Australia, New Zealand, Canada, Iceland, Norway and Switzerland with immediate effect, following UK Export Finance expanding the scope of its Export Insurance Policy (EXIP). Exports from the UK to these markets totalled £499 billion last year, accounting for 74% of all international sales from the UK.
Financial Support for Exporters
If your business is facing disruption due to late payments, UK Export Finance (UKEF) can help ease cash flow constraints by guaranteeing bank loans through its Export Working Capital Scheme.
UK Export Finance (UKEF) is the export credit agency and a ministerial department of the UK government. The UKEF helps UK companies by providing insurance to exporters and guarantees to banks to share the risks of providing export finance. In addition, it can make loans to overseas buyers of goods and services from the UK that can protect UK exporters facing delayed payments or transit restrictions.
At this crucial time, the following help may be available from UKEF:
- If a business is facing disruption due to late payments, UKEF can help ease cash flow constraints by guaranteeing bank loans through its Export Working Capital Scheme
- If you are concerned about getting paid, UKEF offers an export insurance policy that can help recover the costs of fulfilling an order that is terminated by events outside of control
- UKEF can also support finance for overseas buyers through the Direct Lending Facility scheme, so they can continue to buy your goods and services
- UKEF has over £4 billion of capacity to support UK firms exporting to China, as well as significant capacity across other markets affected by Coronavirus (COVID-19) to help cover these risks.
To find out if UKEF covers your region, email:
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