First of all, VAT and import duty are due immediately when importing to the UK.
Use the Duty Deferment Scheme (DDS) to make your monthly payments to HMRC, through a Deferment Approval Number (DAN).
The Duty Deferment Scheme (DDS) and financial guarantees
Furthermore, DDS needs you to provide HMRC with a guarantee through your bank; you are expected to meet the costs of all your VAT and duties.
Simplified Import VAT Accounting (SIVA) can reduce the amount of the guarantee of duty only, but not VAT.
Conditions for SIVA approval
Also, you should apply for SIVA before you apply for a deferment account.
SIVA approval is given to operators demonstrating a high-level of control of operations, like good record keeping that allows for proper customs controls to be followed, as well as a good history of VAT compliance.
Ideally, you’ll have been registered for VAT for at least 3 years.
If you do not have those 3 years of previous registration, you’ll be subject to more financial and credibility tests.
You cannot use SIVA if you fit into any of the criteria below
owe money to HMRC
you have been charged with a serious offence by HMRC
defaulted on deferment account payments more than once in the last 12 months
incurred any default surcharges in the last 12 months
transferred your business as a going concern in the last 3 years – unless the transfer happened because of a change in legal status, such as becoming a limited company
Financial status of applicant
Rejection of your application will occur, if your business is in any financial difficulties, such as
If your business is no longer in financial difficulty and providing you meet all the approval conditions, you can apply for SIVA.
Furthermore, HMRC may carry out more checks, if you have not had a DAN before. They can ask for
- your audited accounts from the last 3 years
- a credit check on your business
Apply for SIVA
You can apply via form SIVA1 and questionnaire SIVA1a.
Within 120 days, HMRC will usually send you a decision or an acknowledgement, if that is not possible.
Until your SIVA application is approved, you will still need to guarantee to cover both VAT and all duties.
There is no limit on the number of times an operator can apply.
So, after approval from HMRC you’ll need to fill in form SIVA2 with details of the amount you will be deferring each month.
A lack of response to HMRC within 6 months of your approval letter will cancel your SIVA approval. Applying again is your only option.
Conditions for continued approval
Finally, you will still need to meet the conditions for SIVA approval to continue using the scheme.
Approval is suspended if you fail to meet the conditions set by SIVA.
With regards to your deferment account limit it can be reduced or suspended at anytime by HMRC.