Underpaying VAT can result in interest charges or penalties, even if the underpayment is accidental. Importers may therefore find new HMRC guidance useful. UK tax authorities have developed an online platform to report underpayment of customs duty, excise or import VAT on an import declaration made using the CHIEF system. By reporting payment errors, and paying the correct amount, importers can avoid additional charges.
In order to use the platform, you need a UK Government Gateway user ID and password.
Identify and report import declaration errors
When reporting underpaid import VAT or customs duty, HMRC guidance recommends first identifying errors on the import declaration and calculating the correct rate of VAT and duties that should have been paid.
Note that you are required to report both the amount that was paid and the amount that should have been paid. HMRC also requires reasons for the underpayment. You must describe the errors on the import declaration.
Payment after reporting
If HMRC agrees with the calculations they will send a notice by post. According to the guidance, taxpayers “must pay within 10 days of receiving the demand note or you’ll be charged interest”.
Eliminate errors and avoid penalties
VAT compliance and recovery is complex and subject to human error. Unfortunately, mistakes can prove costly down the line.
Fortunately, powerful VAT technology can process and error-correct documentation, eliminating human error and optimising compliance.
VAT IT’s world class technology and unmatched VAT expertise enables us to manage the intricacies of VAT compliance and recovery for our customers. Get in touch with VAT IT to maximally recover the import VAT to which you are entitled, avoid costly errors and cut the cost of trade.