The Duty Deferment Account is the most widely used model of payment for customs procedures that is in place in the UK. It is a solution that can significantly streamline the movement of both goods and cash when transporting overseas. So if you are transporting goods to the UK, by having a special account you can benefit from deferred customs duties such as VAT.
A deferred duty account allows you to defer payment of duty and store goods temporarily at no extra cost. An excise warehouse is an HMRC-protected place where goods that are later to enter circulation are stored and all charges will be levied against them at a later date. Both importers and also authorised customs agents can apply for access to a DDA.
What requirements need to be fulfilled to establish a Duty Deferment Account?
A Duty Deferment Account can be used by those importing goods or representing taxpayers who import, as well as those shipping goods from excise warehouses. You do not need to be based in the UK to apply for this account - anyone who pays import duties in the UK is able to do so.
You will need to meet all the conditions in advance and have your request approved by HMRC before you can set up an account. Once your request is approved, you will receive a dedicated 7 digit DAN, or Deferment Approval Number. Once our account is active, you will need to quote this number on all import declarations and when releasing goods from the excise warehouse. The DAN number automatically totals all charges into one joint account.
The Duty Deferment Account allows you to defer payment, and there is also a consolidation that takes place here, which allows you to pay all charges with one transfer. This works in the form of a credit, which we pay to HMRC. You are charged on the 15th of each month, unless the 15th happens to be a bank holiday in which case on the next working day.
Deferred payment through the use of DDA
One of the benefits of having such an account is the ability to defer payment for 2 to 6 weeks. This can result in a faster cash flow to the business. HMRC does not charge interest on these deferrals, which means we can get up to 6 weeks of free credit. Whichever scheme you use whether it is CDS or CHIEF you have the option to set up this account.
If you want a customs agent to set up the account for you, you must authorise them to do so.
Once your DDA account has been activated, you gain the ability to defer the settlement of customs duties and import VAT upon submission of a customs declaration, either yourself or through an agent, using your DAN reference number. Essentially, this allows you to defer payment of customs duties associated with your shipment unless:
- You have exceeded the monthly deferral or guarantee utilisation limit.
- The remaining balance in your deferral or guarantee account for the month is not sufficient to cover the deferral requested.
- HMRC has suspended the use of your account due to payment or compliance issues.
You can entrust the entire process associated with the operation of your duty deferral account to our experienced customs agents, who will take care of both the set-up of the account and also all the operations performed on this system.