If you import regularly, paying duty on every single consignment before it can leave the port soon becomes a drain on time and cash flow. A duty deferment account solves that. According to HMRC, it lets you delay paying most customs charges and make one Direct Debit payment a month, instead of paying for each consignment as it arrives. For UK importers bringing in frequent or high-value shipments, it can make a real difference, and our customs clearance team can talk you through whether it suits your business.
How a duty deferment account works
A duty deferment account lets you defer payment of Customs Duty, excise duty and import VAT. Once your account is approved, HMRC issues a deferment approval number (DAN), which is quoted on your import declarations so the charges are added to your account rather than paid at the time.
HMRC guidance says the amount deferred is collected by Direct Debit on the 16th of the following month, or the next working day if the 16th isn’t a working day. In practice that gives between 2 and 6 weeks of credit, an average of around 30 days. Statements are available 3 working days before the Direct Debit is taken.
What you need to apply
To apply for a duty deferment account in Great Britain, HMRC expects you to have:
- an EORI number (see our guide to the EORI number)
- your company registration number, UK address and VAT number if you have one
- details of your directors
- either a guarantee or an approved guarantee waiver
HMRC says applications are made through its online service and take around 30 working days to process.
Guarantees and guarantee waivers
Because HMRC is effectively giving you credit, it normally wants security in place. That can be a guarantee from a financial institution that’s established in the UK and regulated by the Prudential Regulation Authority.
Alternatively, you can apply for a guarantee waiver. HMRC offers waivers to defer Customs Duty, import VAT and excise up to £10,000 a month, or up to a specified amount over £10,000 a month. To qualify, HMRC’s guidance says you must:
- be established in the UK
- have had no serious or repeated infringements of customs or tax rules in the past 3 years
- have no record of serious criminal offences related to your business activities in the past 3 years
- have held positive net assets (excluding goodwill) at the date of your application and for the past 3 years, or for the period you’ve been trading if shorter
For a waiver above £10,000 a month, your net assets also need to exceed the value of the waiver, and HMRC asks for extra financial information.
Deferment limits
Your account has a monthly limit. HMRC guidance says that if you reach it, you won’t be able to defer any more duties or import VAT for the rest of that month, so shipments arriving after that point would need paying another way. It pays to set the limit realistically, with room for busy months such as the run-up to Christmas.
Does your UK business need one?
A duty deferment account tends to suit businesses that import regularly and pay Customs Duty or excise on most shipments, whether they come through Dover, Felixstowe, Southampton or Heathrow. If most of your imports attract little or no duty, it may be less important.
For import VAT alone, many VAT-registered businesses use postponed VAT accounting instead, which lets you account for import VAT on your VAT return. Some importers use both, deferring duty through their account and postponing VAT.
Frequently asked questions
When is payment taken from a duty deferment account?
HMRC collects the amount deferred by Direct Debit on the 16th of the month after the goods were imported, or on the next working day if the 16th isn’t a working day. That gives an average of about 30 days of credit. Your statement is available 3 working days before the payment is taken.
Do I need a bank guarantee for a duty deferment account?
Not always. You can provide a guarantee from a UK-established financial institution regulated by the Prudential Regulation Authority, or apply for a guarantee waiver. Waivers are available up to £10,000 a month or above, if you meet HMRC’s conditions on compliance history, being established in the UK and having positive net assets.
Can someone else use my duty deferment account?
Yes. HMRC lets you give another person, such as your customs agent, authority to use your duty deferment account number. This is set up through the Customs Declaration Service, so your agent can quote your account on the import declarations they submit on your behalf.
Speak to our customs team
If you’re weighing up a duty deferment account, give us a call on 01304 759200 or drop us a message and we’ll look at your import pattern and explain how deferment and postponed VAT could work for your shipments.