The Institute of Export & International Trade is calling on the government to include import taxes in its COVID-19 measure of deferring the VAT, duty and excise payments that businesses are required to make.
In his package of help for business, unveiled this month, Chancellor Rushi Sunak said the government would defer the next quarter of VAT payments to help companies stay afloat.
Import VAT excluded
However, this measure excluded the payment of import VAT, duty and excise, which are currently due at the time of import.
When goods are imported into the European Union (including the UK), import VAT is charged as a percentage of the value of the imported goods.
Even though VAT can be claimed back by businesses, there can be a delay from the time of import until the date of refund – this can place a cash flow strain on the importer.
Support for importers
The IOE&IT is calling on the government to consider the following measures to support the import of much-needed products to the UK during the COVID-19 outbreak:
Earlier introduction of postponed import VAT accounting, announced in the 11 March budget, and scheduled to start from 1 January 2021 after transition from the EU ends.
For ‘deferment account’ holders, payments are collected by 15th of the following month. The IOE&IT is asking for an extension for these payments, starting from 15th April.
For importers and agents who do not hold deferment accounts, temporary deferment accounts were to be made available under hard-Brexit planning, without an initial requirement for a bank guarantee. The IOE&IT asks for this to be re-introduced as a temporary easement.
Marco Forgione, director general of the IOE&IT, said:
“At this time businesses importing goods need all the help available to keep operating. These firms are essential in keeping the UK economy functioning.
“Deferring VAT payments will help with cash-flow and ensure that businesses, many of which are small-to-medium sized, will be able to continue operating.
“Such firms are already having to cope with declining demand, problems sourcing products and significant increases in transport costs. Deferment of import VAT will be an essential lifeline.”