Customs information papers – Change in VAT rate
A new Customs information paper (CIP) has been published to remind businesses that they need to immediately increase the level of their customs guarantees and deferment accounts to reflect the change to the standard VAT rate.
The level of customs guarantees need to be increased as a direct consequence of the increase in the standard VAT rate from 17.5% to 20% from 4 January 2011. Businesses that expect to use customs guarantees now need to ensure that their guarantee amounts are set at a sufficient level to cover the increased VAT rate.
The CIP also includes mention of the Simplified Import VAT Accounting (SIVA) scheme. The scheme is designed for businesses that incur VAT on imported goods and can also help in reducing security requirements and associated costs as well as the compliance costs of having a guarantee in place. There are a number of conditions which must be met for a business to join the scheme, details of which can be found in HMRC’s notice entitled SIVA 1.