What is a Duty Deferment Account?
The DDA, also known as a Duty Deferment Account, permits import VAT and duty payments to be deferred for 15 days after the goods are brought into the country. A bank or insurance company guarantee is required by HMRC for such accounts. Deferment accounts are used by many businesses that import goods from outside the EU.
What is a Duty Deferment Account used for?
If you import goods on a regular basis, you can open a duty deferment account to postpone payment of most customs or taxes, such as
- Customs Duty
- excise duties
- import VAT
You can also apply to have duties on goods released from an excise warehouse deferred. The advantage of using a duty deferment account is that separate consignment payments are aggregated into a single monthly payment that can be made via direct debit.
Who can apply for a Duty Deferment Account?
Those who are importing goods or representing taxpayers making imports are eligible to apply for a duty deferment account, as well as those who are shipping goods from excise warehouses. It is not required to be established in the UK to apply for an account; anyone can apply for the account and pay import duties in the UK.
What information is required to complete your application for a Duty Deferment Account?
To complete your application you’ll need your business’s:
- EORI number
- name associated with your EORI number
- registered company number (if this applies), in the UK this will be from Companies House
- UK address associated with your EORI number
- correspondence address
- VAT number (if this applies)
- company directors’ and officials’ details, including date of birth
- person responsible for customs authorisations, their details, and practical customs experience
- your estimated debt
If you apply for a guarantee waiver you may also need:
- records of any times when your business has not followed customs or tax rules in the last 3 years
- financial records
How to apply for a Duty Deferment Account?
Those who wish to apply for an account must submit an application on HMRC’s official website. HMRC predicts a 30-day turnaround for application processing; however, if a guarantee (from a UK bank) is necessary, the turnaround time could be greater. Guarantee waivers are allowed in some situations, but only if the importer is based in the UK.
There are 2 types of guarantee waiver approvals:
- approval for a guarantee waiver to defer customs duty, import VAT, and excise up to £10,000 per month
- approval for a guarantee waiver to defer customs duty, import VAT, and excise up to a specified amount over £10,000 per month
To be approved for a guarantee waiver, you basically need to have a “clean record” and have sufficient assets.
If you’re applying for a guarantee waiver of up to £10,000 per month
You will need to tell HMRC more information about your finances using form PFS1 if you:
- do not file accounts at Companies House (for example, if you are a sole trader or a general partnership)
- file consolidated accounts at Companies House
Authorised Economic Operators for Customs (AEOC and AEOF) do not need to upload a PFS1.
If you’re applying for a guarantee waiver of over £10,000 per month
You must complete the PFS1 form and attach supporting documents to your application to provide more information about your financial situation.
PFS1 is not required for Authorised Economic Operators for Customs (AEOC and AEOF).
Find out more about the supporting documents you need to provide.
How to apply to defer Customs Duty, excise duty, and import VAT?
If you want to defer Customs Duty, excise duty, and import VAT you must:
- Decide if you want to reduce financial guarantees by using a duty deferment account guarantee waiver approval or Authorised Economic Operator customs simplification (AEOC).
- Apply for a duty deferment account and optional guarantee waiver – send with your application a Direct Debit instruction.
If you’re applying to defer excise duty
This application would apply to any excise duty deferred at importation or released from an excise warehouse.
You also can still use the Excise Payment Security System after 1 January 2021 for duty deferment that is not part of importation or releasing goods from an excise warehouse.
If you’re applying to defer import VAT
You can apply to defer import VAT if you are a trader who is either:
- not VAT registered
- VAT-registered or not accounting for VAT on your VAT Return
You do not need to apply for a deferment account to defer import VAT if you are using postponed VAT accounting for imports.
What happens after you submit your DAN application?
A deferment approval number will be issued if your application is granted and a Direct Debit is set up. This will be required on import declarations and when removing products from an excise warehouse.
How can you use your DDA to make payments?
All payments must be made through the BACS direct debit method, and the currency used must be pounds sterling. It’s important to double-check that the direct debit is set up properly and that the amounts are accurate. If not, HMRC may suspend your account and charge you penalties and interest.
The payment due dates set by HMRC are:
|Custom duties and Import VAT||
How can I authorise someone to use my DAN (Deferment Approval Number)?
If you’re using the Customs Handling of Import and Export Freight (CHIEF) system
You can give someone authority to use your duty approval number, including the authority to ask for a deferment of duty payment, if your application is approved.
You can make an application by using:
- the online form
- form C1207N
- form C1207S – this can be used on a one-off basis and can only be done when your account is active
If you’re using the Customs Declaration Service
You must use the view your customs financial accounts in the Customs Declaration Service if you want to:
- give someone authority to use your duty Deferment Approval Number
- amend a standing authority
Can I amend or cancel my Duty Deferment Account?
Yes, you can amend or cancel your Duty Deferment Account using the official online form on HMRC’s official website for the same.
CLICK HERE to know more about it.