Simplified Import VAT Accounting (SIVA) scheme
The Simplified Import VAT Accounting (SIVA) 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. Obtaining approval to use SIVA means that the financial guarantee for import VAT can be reduced to zero for the amount specified by HMRC (based on current or anticipated liabilities). In order to be approved to use SIVA, businesses must have been VAT registered for more than three years. HMRC will also look at other criteria including debtor history, offence record, VAT compliance history and financial viability before deciding whether to approve an application to use SIVA.
A recent First-tier Tribunal case had to consider whether HMRC had acted unreasonably in refusing an application of a company to participate in the SIVA scheme. The company’s application to join SIVA was short on facts and the Managing Director confirmed under cross-examination that two years’ annual accounts had not been submitted. In addition, the application did not include any covering letter or other material concerning the trading and financial position of the company. The application was refused primarily, as the new company had been VAT registered for less than three years.
The taxpayer in this case argued that the company was being discriminated against as it was a start-up company. However, the tribunal was clear that based on the information presented to HMRC it had taken a reasonable decision in refusing the application. The Tribunal refused the taxpayer’s appeal but did suggest that as the company has now been trading for a longer period that this may be an opportune time for a further application to be made to join SIVA.