If you're importing goods to the UK from specific parts of the world then you will need to pay import vat when you import goods from eu special territories as well as from non eu countries. This tax is collected by the hmrc vat department or hm revenue and customs department at the port or airport itself and the goods are then subject to local sales vat rules.
The hmrc has provided for 14,000 classifications of products and services that are governed by customs duties, excise duties and import vat. Most alcohol and cigarettes and tobacco products together with certain activities like gambling are governed by excise duties while almost every other imports come under customs duties and import vat according to the goods and the country from which they arrive.
The hmrc has specified eu special territories where import vat is going to be levied if services or goods are brought in or delivered to such territories. Those are the French Overseas Departments of Guadeloupe, The Canary Islands in Spain, The Aland Islands in Finland, French Guiana, Mount Athos and Reunion and Martinique in Greece, and The Channel Islands in the United Kingdom. This vat will also be levied when you import goods from non eu vat registration number countries.
However, if you are a vat registered trader in the United Kingdom then you can make application for a vat refund in case you have already paid vat on any goods in the country of origin itself before being imported to the UK. You can also offset this vat against sales vat if the products which you've imported are sold in the local UK market. Countries such as the UK and Italy offer special vat deferment schemes where you can get relief from import vat for approximately one month by filing out a special vat form with the hmrc and opening of an special vat deferment account with them. This move would help safeguard your cash flow.
When you start selling your goods or services from your market then you will also need to charge any local sales vat rate to the clients. You will need to make vat invoices that specifically mention vat rates and also file regular vat returns. For those who have problem in understanding various duties and taxes imposed by the hmrc then you should hire the services of an excellent vat and customs agent. This may allow you to concentrate on expanding your enterprise while all relevant paperwork and payment of taxes and duties is handled in an efficient manner.
The import vat rate is exactly like sales vat rates of comparable products available in the United Kingdom. The United Kingdom has 3 vat rate slabs. The first is the standard vat rate of 17.5% that is slated to rise to 20% from January 4, 2011. Second is the reduced vat rate of 5% whilst the third is zero vat rate. There are also certain products or services that are totally exempt from any vat.
You should have sufficient knowledge on various duties and taxes applicable on imported goods to the UK to enable you to calculate the charges on an accurate basis. You should use all legal avenues to lower your costs such as vat refunds, vat deferments, etc to enable you to lower your costs further and improve the cash flow of your business. You need to diligently pay import vat when you import goods from eu special territories or from non eu countries and employ the services of an efficient vat agent to claim additional vat back.