Business tax – guidance

Imports from outside the EU

Pay import duty and VAT due on goods imported from outside the EU and make customs declarations.

Introduction

Imports from overseas are treated differently depending on if the goods come from countries within the EU or from outside it.

Within the EU most goods:

  • are in free circulation
  • can be imported with minimal customs control
  • have no import duty or VAT to pay

Imports from outside the EU are treated differently. You:

  • must make an import declaration to customs
  • generally have to pay import duty and import VAT (plus VAT on import duty)

Authorised Economic Operator (AEO)

If you’re already involved in international trade and have an Economic Operator Registration and Identification Number (EORI), you can register with HM Revenue and Customs (HMRC) as an Authorised Economic Operator (AEO).

The scheme isn’t compulsory, but companies that meet the requirements can take advantage of simplified customs procedures for the security and safety of their imported goods in transit.

Import declarations

You have to send a declaration to HMRC when you import goods into the UK from outside the EU. This is usually done using the Single Administrative Document (SAD), also known as form C88.

SADs can be submitted either electronically using the Customs Handling of Import and Export Freight (CHIEF) system, or manually (although manual submissions may take longer to process).

You need to include the:

  • customs classification
  • commodity code
  • import value of your goods
  • customs procedure code explaining what is being done with the goods, for example import to free circulation

Find commodity codes and other measures applying to imports and exports by using the online UK Trade Tariff tool

Use an agent to make your import declaration

You can use an agent such as a freight forwarder to make the declaration on your behalf. This can make importing simpler and faster if you’re not authorised to make electronic declarations yourself.

You can also register for some electronic customs declaration processes such as exports on the Government Gateway.

Import Control System (ICS) declarations

Safety and security laws in force since 1 January 2011 mean goods destined to arrive in the EU must be declared to the Office of First Entry to the EU (that member state’s ICS) within set time limits.

The legal onus is on the carrier of the goods to make the ICS declaration, but the carrier can, with its explicit knowledge and consent, delegate this activity to the importer and/or his agent. If so, an Entry Summary Declaration must be made for your goods. UK ICS will provide the carrier, or delegated declarant, with a Movement Reference Number for the goods.

Community/common transit procedures

Community Transit (CT) is a customs procedure which allows customs and excise duties and VAT on imported goods to be suspended until the goods either reach their point of destination in the community or are exported out of it.

The CT procedure can also be used for movements to and from the European Free Trade Association (EFTA) countries. This is then known as common transit (CT). The EFTA countries are:

  • Switzerland
  • Liechtenstein
  • Norway
  • Iceland

The New Computerised Transit System

The New Computerised Transit System (NCTS) must be used for all CT declarations, except for private travellers (with goods in excess of their allowances), and for some authorised simplifications. Any potential taxes and duties on the goods must be guaranteed. Use of the NCTS doesn’t normally preclude use of other customs procedures such as customs warehousing.

Approved AEO traders

If you’re an approved AEO trader you can use certain simplified customs procedures without having to produce the goods to customs. These include:

  • guarantee waivers
  • approval to start NCTS movements at your own premises (Authorised Consignors)
  • approval to end the movements at your premises (Authorised Consignees)

Transport Internation aux Routiers

If the journey begins outside the EU, you can use the Transport Internation aux Routiers (TIR) procedure for movements to and from countries that are contracting parties to the TIR Convention:

  • the goods must travel by road in approved vehicles or containers under customs seal, accompanied by a TIR carnet document
  • you, or your freight forwarder, must be authorised to use TIR and the potential taxes and duties on the goods must be guaranteed

All traders moving goods across the EU under TIR must submit a declaration using NCTS when the consignment reaches the frontier of the EU.

You can get more information about TIR from:

Taxes and duties on imports

It’s important that as a trader you know whether you have to pay import VAT and duty on your goods before they can be cleared for entry into the UK.

VAT

VAT’s charged on goods imported from outside the EU at the same rate as if you bought the goods in the UK.

VAT-registered businesses can reclaim the VAT as input tax in the same way as VAT is paid on UK purchases. You’ll also have to pay VAT on any import duty.

Import VAT is paid directly to HMRC, while domestic VAT is normally paid to a supplier of goods.

After an import VAT payment is made by a UK VAT-registered trader, an HMRC form C79 showing the VAT paid will be electronically produced and sent to the business address. You can use this as evidence of the VAT paid on your VAT return. Authorised traders may also be able to use the deferred accounting scheme to pay VAT.

Goods such as tobacco and alcohol products are subject to excise duty.

Import duty

You might have to pay import duty depending on the classification of the goods and where they come from. Your goods might also be liable to additional duties, such as anti-dumping duties.

You can pay a reduced or zero rate of import duty on imports of certain goods from some countries, though there may be a limited annual quota. You usually need to provide documentary proof showing where the imports originated from. Read more on tariff preferences in Notice 826.

Goods aren’t normally released by HMRC until you’ve paid all the charges due. But, you can defer payment or you might be able to claim a relief allowing you to pay lower, or no, charges.

Defer or delay import charges

Imported goods aren’t normally released by customs until you’ve paid duty and VAT. If you import regularly you can set up a deferment account with HMRC, allowing you to pay monthly in arrears. To apply for a deferment account you have to provide a Customs Guarantee from a bank, insurance company or building society.

Notice 101 has detailed guidance about deferring import duty and VAT, including information about customs warehousing.

Depending on your circumstances, you might be able to delay your liability to import duty or VAT.

If you don’t need the imported goods immediately or you intend to re-export them, you can store them in an authorised customs warehouse. You don’t have to pay import duty, excise duty or VAT until you remove the goods into free circulation.

You can read more information about customs warehousing in Notice 3001. Rules followed before 01 May 2016 can be found in Notice 232.

Reliefs on imports for export or re-export

If you’re importing goods that you’ll later export or re-export, you may be able to claim relief from customs charges due on importation.

Temporary Admissions

If goods are to be temporarily imported for use, relief from import duty or VAT may be available, provided the goods will remain in the same condition as they are imported.

Temporary admission (TA) doesn’t remove the need to comply with any import/export prohibitions or restrictions.

Read about temporary admission in Notice 3001. Rules followed before 01 May 2016 can be found in Notice 200.

One method of TA is the Admission Temporaire/Temporary Admission (ATA) carnet. The carnet is issued in the country of dispatch usually by local chambers of commerce and industry and is used in place of customs documents normally required at import and/or re-export. ATA carnets are only applicable in countries which are signatories to the ATA Carnet or Istanbul Conventions. Read about ATA carnets in Notice 104.

You can’t use any of these reliefs for goods that you plan to process before re-exporting. Minor handling is permitted to preserve the goods and prevent their deterioration.

Processing and re-exporting

You can claim Inward Processing (IP) if you’re importing goods that you intend to process and then export.

IP suspension lets you import and process the goods while suspending duty and VAT payments. You must be authorised by HMRC to use Inward Processing Relief.

There’s more information about IP in Notice 3001. Rules followed before 01 May 2016 can be found in Notice 221.

Onward supply to the EU

You may be able to claim Onward Supply Relief (OSR) if you’re importing goods that you plan to supply to another EU member state.

OSR allows you to import the goods without paying import VAT. Instead, VAT is paid when you supply the goods to your customer.

Read about OSR in Notice 3001. Rules followed before 01 May 2016 can be found in Notice 702/7.

Import reliefs on previously exported goods

If you export goods to be repaired or processed outside the EU before being re-imported, you may be able to claim Outward Processing Relief (OPR).

You claim relief from import duty on the value of the goods you originally exported or the difference in duty between the exported and re-imported goods. You need to be authorised to claim this relief.

Find out more about OPR in Notice 3001. Rules followed before 01 May 2016 can be found in Notice 235.

You may be able to claim Returned Goods Relief (RGR) for imports of goods that were previously exported but haven’t been processed overseas. For example, you might use this if your customer rejects and returns the goods.

Depending on the circumstances, you may be able to claim full or partial relief from import duty, import VAT or both. Read more on RGR in Notice 236.

Special import reliefs

There are further reliefs that can be claimed for certain types of goods, or goods that are used in certain ways.

For example, you:

  • can import goods for charities, goods for exhibitions, and low-value samples, free of duty
  • may be able to import scientific goods to be used in tests free of duty and VAT - see Notice 374

These reliefs are part of the Community System of Duty Reliefs (CSDR). These usually apply to imports that serve a social purpose, such as imports of goods for people with disabilities, or museum exhibits.

If you import goods to process into a product that carries a lower rate of import duty than the imported goods, you can apply for processing under customs control (PCC) and pay duty on the lower rate applicable to the processed goods. The duty and import VAT due must be calculated on the higher value of the processed products. Read more on processing under customs control in Notice 237.

Special industries

Special relief from import duty for imports of spare parts for civil aircraft ceased on 31 December 2009. From 1 January 2010, these goods came under the regular customs warehousing procedure. This allows suspension of payment of import duties and/or import VAT when non-Community goods are stored within premises or under an inventory system authorised as a customs warehouse. If excise duty is applicable, it too is suspended while non-Community goods are under the customs warehousing procedure.

If you operate a depot for aviation spare parts, you can either apply to be authorised to operate a customs warehouse or deposit your goods in an existing customs warehouse facility. If excise duty is applicable, it too is suspended while the goods are in customs warehousing. You can read more on the customs warehousing procedure in Notice 3001. Rules followed before 01 May 2016 can be found in Notice 232.

Reclaiming taxes on rejected imports

If you’ve received a faulty delivery, you’ll probably need to reject the goods you’ve been sent. You can usually do this if the goods are defective or were damaged before clearing customs. You can also reject goods that aren’t in accordance with your purchase contract. You may not want to pay import VAT or duty, or you might want to reclaim any VAT or duty you have already paid.

You must notify HMRC in advance, and then dispose of the goods. Claims have to be made within a year of the duty becoming due. You can dispose of the goods by exporting them outside the EU, for example by returning them to your supplier, or destroying them.

Read about rejected imports in Notice 266.

More information

Contact the Imports and exports: general enquiries helpline.