How do I reduce cash flow pressures if I’m an importer?

What is the Duty Deferment Scheme?

The Duty Deferment Scheme enables UK businesses to defer payment of import duty to HMRC until a later prescribed payment day. Usually, duty payments are deferred for about 30 days and a range of duties can be deferred (Excise Duty cannot).

Outlining the key business benefits, HMRC says: “You do not have to pay immediately each time you want to clear your goods – by inserting your Deferment Approval Number (DAN) on import entry documentation you can settle a month’s charges with a single payment using the convenience of direct debit.” Moreover: “We can normally clear your goods [quicker] because we do not have to handle payments for each transaction.”

Using the Duty Deferment Scheme also benefits HMRC, because, it says: “For us, it is a very effective and efficient way to clear your goods and collect the charges due. Also, we are as interested as you are in speedy clearance.”

Who can use the Duty Deferment Scheme?

The Duty Deferment Scheme can benefit businesses that import, as well as owners of goods in a warehouse or free zone and agents who enter goods for importers or owners.

Each can use the Duty Deferment Scheme to make monthly payments to HMRC via their Deferment Approval Number and account, but you must provide a guarantee through your bank/building society that you can meet duty/VAT costs. 

Businesses that need to move goods in or out of the European Union (EU) will need an Economic Operator Registration and Identification (EORI) number to carry on trading with the EU post-Brexit. EORIs fulfil the same purpose as DANs and work in the same way, but are standardised across the EU. 

To use the Duty Deferment Scheme, you must apply to HMRC for a DAN or EORI, but HMRC will not charge your business to have a deferment account (your guarantee provider may charge you).

Applying to use the Duty Deferment Scheme

Businesses must use Form C1200 to apply to defer payment on duties, taxes and charges on goods removed from an excise warehouse. Businesses must use Form C1207N to give authority to an agent or freight forwarders to request deferment of duty payment against importer’s DAN. To use an EORI, businesses will need to complete Form CCG1.

If HMRC is satisfied with your application, guarantee and payment arrangements, you will receive a Certificate of Approval, which will show your Deferment Approval Number. You must quote it on each deferment request and when writing to HMRC about your deferment arrangements. 

The approval covers your business to the limit of your guarantee for deferment of all eligible charges. Your Deferment Approval Number can be used at any UK port, airport or warehouse, but approval can be suspended at HMRC’s discretion.

Payments to HMRC must be made using Bacs (Direct Debit). According to HMRC: “We arrange for the total amount you defer in the accounting period to be debited automatically on payment day from your bank account and transferred to our bank account”.