COVID-19: Urgent action needed by firms to delay import VAT and duty payments
11 June: HMRC is urging importers unable to make payment of deferred customs duties and import VAT due on 15 June to take action now, as it shares further support for firms.
HMRC has reaffirmed that duty deferment account holders and registered importers facing “severe financial difficulties as a direct result of COVID-19” can apply for more time to pay duties and import VAT. The reassurance came alongside HMRC’s answers to a series of frequently asked questions about the process (see below), covering how to request an extension and whether interest will be charged on outstanding payments.
Businesses that hold duty deferment accounts can apply for an extended period in which to make payment for duties and import VAT due on 15 June, as they were able to for payments in the past two months. They must contact the Duty Deferment Office for approval for an extended period to make full or partial payment. HMRC has confirmed that this would not result in deferment accounts being suspended or guarantees called up.
Meanwhile, registered importers who pay cash or an equivalent can contact HMRC to request an extension to the payment deadline at the time the payment is due. HMRC will consider this request and decide whether or not to agree an additional time to pay on a case-by-case basis.
HMRC’s FAQs on extending payment periods for customs/import VAT duty
1: How can duty deferment users request a payment extension?
If a duty deferment user is facing severe financial difficulties as a direct result of COVID-19 and is unable to make payment of deferred customs duty and import VAT due on 15 June they should contact HMRC to request an extension.
Duty Deferment Account (DDA) users who had a payment extension agreed for their April or May payments should email the Central Deferment Office firstname.lastname@example.org to confirm that a payment extension is being requested for the June payment due to COVID-19. The email should indicate whether the financial situation remains the same (or has worsened).
All other requests can be made by contacting the Central Deferment Office at the email address above, or by phoning 03000 594243 or the COVID-19 helpline on 0800 024 1222 (08:00-16:00, Monday to Friday).
2. Can duty deferment users continue to use their duty deferment accounts while payment remains outstanding and if so, will they need to increase their guarantee?
DDA 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.
3. Will HMRC charge interest on these outstanding payments?
No, where HMRC agrees to an extended payment period, interest will not be charged on the outstanding payments provided they are paid in full by the agreed date.
4. Can duty deferment users request a payment extension if they think it will help ease cash-flow concerns while the COVID-19 measures remain in place?
To qualify for the extended payment period, the duty deferment user must be experiencing severe financial difficulties as a direct result of COVID-19 which mean they are unable to pay the deferred customs duty and import VAT due on 15 June. Duty deferment users financially capable of making payment in full on 15 June should do so.
5. How do you assess whether duty deferment users are suffering genuine financial difficulty as a result of COVID?
Any duty deferment user who is experiencing severe financial difficulty as a result of COVID-19 and is unable to pay the customs duty and import VAT due on 15 June can contact HMRC to request an extension to the June payment deadline. They will be asked to provide an explanation of how COVID-19 has impacted on their business finances and their cashflow. DDA users who had a payment extension agreed for their April or May payments will be asked to confirm that their financial situation hasn’t changed (or has worsened).
6. Will the payment deadline extension apply to payments due on 15 July?
HMRC will be reviewing the position for payments due in July.
7. Do these arrangements apply to payments of deferred excise duty?
Separate arrangements are available for deferred excise payments. Businesses unable to pay excise duty owed to HMRC due to COVID-19 should contact the COVID-19 helpline on 0800 024 1222 discuss an enhanced Time to Pay arrangement.
8. What about businesses who pay their customs duty/import VAT through a duty deferment account held by their customs agent?
HMRC can only arrange duty deferment extended payment arrangements with the DDA holder. Where a customs agent or intermediary who holds a DDA is granted an extended payment arrangement, HMRC would expect the agent to pass on the benefit of the additional time to pay to the importer if the payment arrangement was agreed on the basis that they’ve been unable to secure payment from an importer.