VAT and duty

VAT and duty

How we can help you manage VAT and Duty

We are an experienced team of VAT and Duty specialists, that provide clear advice and solutions to our clients’ indirect tax issues.

We have significant practical experience of advising a broad range of entities. These include owner managed businesses, large multinational corporates, entities with international supply issues, charities and other not-for-profit entities, colleges and schools, property groups and high net wealth individuals with investments.

Kreston Reeves is one of the largest accountancy firms practising in the South East of England with over 500 staff based in London, Kent and Sussex. Membership of Kreston Global, one of the largest worldwide networks of accountants and business advisers ensures that the firm has a truly global reach.

Our services include:

International VAT

We are part of the VAT ‘Special Interest Group’ within the Kreston Global Network of independent accountants and business advisers. The Group consists of 60+ VAT specialists located all around the globe.

We advise on compliance matters and effective structuring, manage EU-wide supply projects, achieve registrations in applicable countries and complete VAT returns and other statistical declaration obligations for our clients.

VAT consultancy services

We can assist you in advising on specific transactions or we can undertake reviews of your business to understand the issues you may have, or opportunities where more VAT than appropriate is paid.

We provide clear, innovative and commercial solutions to issues and help in implementing changes to your VAT system, or in making disclosures and submissions to HMRC as appropriate. We believe in understanding your business in long term relationships in order to offer the very best service.

VAT registration and de-registration

Our team can assist with the application process for registration, VAT grouping and de-registration and advise on the implications of such action in order that potential pitfalls are identified.

Negotiations with HMRC

We have years of experience in successfully handling disputes between HMRC and businesses, including seeking ‘clearances’, decision reviews, appealing surcharges and appeals through Tribunals.

VAT recovery

We undertake UK and international VAT recovery claims.

Duty advice and claims

We advise on the correct Duty payable on import, and undertake reviews given that the classification of goods in order to pay the right Duty is often a challenge. In conjunction with our reviews we submit and manage claims to HMRC for overpaid Duty.

Training

We are experienced in providing general VAT training, or in developing bespoke VAT training events for clients in sectors such as charities/not-for-profit.

RevealCustoms duties

Duties, or “tariffs” are taxes that are usually levied on the value of goods imported into a country but can, in certain circumstances be due on exports.  The liability for duty depends on the type of commodity/product being imported, the country of origin and whether the importation is subject to any Free Trade Agreements (FTAs) in place between the trading parties.  The UK has numerous FTA’s in place, for example, the UK and EU’s Trade and Cooperation Agreement signed in December 2020.

When duty is due on importation, the party responsible for payment depends on the shipping terms, or “Incoterms”, but is usually paid by the ‘importer of record’, which can therefore be you or your customer.

In principle customs duty is irrecoverable from HMRC (or other country authority) unless a reclaim becomes due through incorrect data elements presented at the time of importation to the UK.  A reclaim is permitted up to a 3-year period. This distinguishes duty from VAT, another tax due at import, which may be reclaimed if an importer is registered for VAT in the country where the goods are imported and, usually as a rule, if it owns the goods at the time of import.

There are various regimes which allows customs duty to be suspended at the time of importation,  thus resulting in no duty being paid. These regimes usually need to be applied for at the time of importation to the UK, but on occasions retrospective applications can be made.

Given that duty is a cost within purchase and sales supply chains it is important to understand and be confident with what is being paid, and to review that periodically.  If correct details are not presented to HMRC at the time of importation – for example, value, commodity code, origin status, preference status under an FTA – it is possible than you or your customer will experience difficulties identifying true landed costs resulting in pricing issues, contractual disputes or unhappy customers unwilling to trade in future.  Or it may simply result in your profit margin being eroded.  This is why it is important to plan for duty and to seek expert assistance in doing so.

Customs agents should be able to help you both in terms of entering the correct paperwork for declarations to clear customs and comment on commodity codes.  But, accuracy in regard to the latter is not always present, for example when agents are dealing with bulk shipments and cannot identify goods to which a relief could applies (Return Good Relief, Temporary Admission as an example). Also, given our experience of submitting retrospective duty claims for our clients it is clear that the classification of goods is an art in itself.  There are often subtle differences in types of commodities which can lead to the duty rates being much higher than they need to be.  For example male fragrances (0%) versus aftershave (6%). Hair Turbans hat (2%) versus clothing (12%).

For the above reasons, in addition to the services of your customs agent, you should consider obtaining advice from a customs specialist.  Kreston Reeves can assist you in this regard.

How we can advise on duty

Here are some of the services that our specialists can assist you with:

  • Planning to minimise duty – Post Brexit, issues have arisen such as duty being due twice, on goods imported into the UK prior to their sale into the EU. We can review your supply chains and identify ways of minimising duty, including through customs warehousing, or by recommending alternative processes.
  • Duty reviews – reliefs – The amount of customs duty due can be legitimately reduced or removed using Customs reliefs and suspensions. The type of relief applicable will depend on how the goods are to be used, for example for testing purposes, temporary import/export or for processing/manufacture prior to re-export.
  • Duty reviews – claims – We can review the UK duty you have paid over the past 3 years, identify lower, correct, tariffs and submit claims to HMRC on your behalf. It is important to do this with care to avoid the possibility of penalties for incorrect claims.
  • Advice and claims in other countries – the Kreston global network of accounting and business advisory firms, present in over 120 countries, can assist you with any advice on duties that you encounter around the world.
  • Origin advice – Given that the “easement” period for clearing imports into the UK has now disappeared and full Customs procedures must be followed, the ‘rule of origin’, in terms of meeting the zero preferential tariff when trading in goods between the UK and EU, needs to be carefully considered. We can advise on this and also the procedures that must be followed by suppliers and customers in order to avoid subsequent challenges for importers, whether that be you or your customers.
  • Customs valuation – The total landed-cost of products needs to be identified when importing goods to different countries, thus understanding margins and costs of customers. Through visibility of these costs, an importer can understand if the amount of customs duty due can be reduced through the use of reliefs and other planning opportunities. We can advise on this.

RevealCustoms clearance

Customs clearance is not just about obtaining a UK EORI number.  There is EU legislation (the Union Customs Code), largely mirrored by the UK’s Taxation (Cross-border Trade) Act which governs customs clearance matters.  Their requirements can halt supplies unless they are adhered to.

For example, whether for UK import or export, a customs declarant must be established in the UK.  This law also deals with types of agent that can act as a representative to achieve such obligations.

In some cases an indirect representative cannot be appointed to clear goods in its name and so an establishment may be need to be set up.  We can advise on all aspects of what is required in this regard, in the UK or abroad through our Kreston Global network.  This includes advising on the pros and cons of setting up in each country from a direct and indirect tax perspective, handling the set up of a company and ongoing compliance.  We can also advise on alternative structures involving representatives in countries such as the Netherlands.

We can review your processes to identify issues associated with clearing customs.  A lack of instructions provided to customs clearance agents by the importer is common and can result in misunderstandings and incorrect import declarations submitted to the customs authorities.

Another area which can result in issues in clearing customs or the duty payment obligations is the contractual terms between a supplier and customer, and the agreed Incoterms.  Understanding which party to the contract is responsible for which element of the import/export activity and payment of any customs duties is important and something we can advise on.

Sector expertise

  • Land and property – acquisition, disposal, going concerns and development (including charitable, residential, conversions and mixed schemes)
  • International – goods and services – trading in the EU and worldwide
  • Charities, not-for-profit including CICs
  • Education – colleges, independent schools and academies
  • VAT partial recovery methods – devising and agreeing with HMRC Partial Exemption Special Methods and business/non-business methods (particularly in charities, education, finance, insurance, health, sports and ecclesiastical sectors)
  • Farming
  • Manufacturing
  • Media services, conferences and exhibitions
  • Travel and transport services
  • Retail

Specialist advice on all indirect taxes

We also offer specialist advice on all indirect taxes including:

  • Excise Duty
  • Insurance Premium Tax
  • Air Passenger Duty
  • Aggregate Tax
  • Landfill Tax
  • Climate Change Levy
  • Stamp Duty

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The support of Kreston Reeves’ VAT Team has proved invaluable in keeping our business on the right side of very complicated VAT legislation. After a full compliance review, issues with... More HM Revenue & Customs were resolved promptly, accounting processes were explained clearly and a VAT claim was repaid with the minimum of fuss. I would highly recommend the Kreston Reeves VAT Team to any business seeking guidance and reassurance about their VAT and other tax matters. Alan Firmin Limited

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Rupert Moyle was a delight to work with. We were facing some very complex VAT issues and Rupert used his considerable experience to guide and support us to a very... More satisfactory conclusion. He has the ability to condense difficult challenges into something non-specialists can relate to and I would highly recommend Kreston Reeves. Marcel Jenkins, Finance & Operations Director, Studio Wayne McGregor

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Kreston Reeves have been our accountants and auditors from the outset, and have just completed the first full audit of the company’s accounts and those of its parent companies. This... More work has been led by Alison Jones, with the assistance of other members of the team especially Katy Long. Kreston Reeves have also been responsible for the preparation of the group’s VAT returns and tax computations, and have provided payroll services and general accounting and financial systems advice. Until we were in a position to take it inhouse they also prepared the company’s management accounts. Throughout the relationship the work has been carried on with professional efficiency. Practical assistance and advice has always been available when needed. I have especially been impressed by the care taken in planning our first audit so that it has been completed on time despite intervening difficulties. When problems have arisen pragmatic solutions have been found. Their advice in relation to audit issues and the responsibilities of directors has been clear and always helpful. The result is that a process which I approached with some trepidation has proved not to be nearly as stressful as I feared. I would recommend Alison and her team without reservation. Dick Russell, Director, I-360 Limited

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Kreston Reeves has supported us at Royal Museums Greenwich with VAT assistance for some years now. Our services are diverse as are the VAT and other tax consequences that can arise,... More such as for admissions, membership, patrons schemes and capital projects. Whenever it gets complicated and we need a specialist to explain clearly the effect of an issue and to arrive at a sensible solution Rupert and his team are there to help. Lisa Sian, Finance Manager, National Maritime Museum

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Kreston Reeves have served as the Guild's financial advisers and have carried out the annual examinations of the Guild's company and charity accounts since 2013. The examinations of the... More Guild's accounts have always been carried out most diligently and professionally, by experienced accountants, working to timetables that suit the Board of Directors of the Company and the Trustees of the Guild's Charity. Of particular note is that the experts at Kreston Reeves LLP are always ready to give timely and accurate advice and guidance on all financial matters, including accounting procedures, Corporation Tax, VAT, PAYE and Gift Aid, to ensure that uncertainties are resolved as they arise. In addition to being totally reliable as auditors and highly responsive as advisers, Kreston Reeves also run an invaluable series of most informative seminars and study periods, at no cost to their clients, which provide excellent and very welcome opportunities for Company directors and Charity trustees to keep up to date with changes to the law or to financial practices. Michael Kuen, The Clerk, The Guild of Freeman of the City of London

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We asked Kreston Reeves’ charity VAT specialists to review our VAT as we hadn’t looked at this area for a few years. Rupert and Daniel not only showed a great... More understanding of us, they demonstrated considerable technical ability, creative solutions and explained the issues and recommendations to us clearly, simply. They successfully negotiated a fantastic outcome for our charity with HMRC, which means that we will have a lot more money to use to support our charitable aims in the coming years. I would certainly recommend a VAT review, and by them. Rebecca Nash, Director, Royal Engineers Museum

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I have always found the Kreston Reeves team to be helpful and flexible, rigorous with access to top-class specialists and the most up-to-date information on Charity accounts. Our accounts are... More complicated, despite our relatively small size - two companies, fee income, grant income, multicurrency, VAT, onward granting - so there is plenty to grapple with. The Kreston Reeves team is on top of all the issues that face an international charity like ours. Julie Saunders, Executive Director, Pepal

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Kreston Reeves has been a true partner to Virtuo. Being able to quickly understand our business has meant that Michael and his team have been able to contribute to our... More business from day one. They helped us to set up in the UK with invaluable support and business advice on VAT, payroll and company pensions that ensured we met all the UK regulations. They are now our virtual finance team in the UK and provide us with ongoing support and advice as we grow our business. Michael Altom, General Manager for UK & Ireland, Virtuo

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I would like to thank Rupert and the Kreston Reeves VAT team for their work on a complex matter with HMRC regarding whether a key product line was subject to... More VAT. The team provided clear guidance and ably handled negotiations with HMRC, leading to a fantastic result. The team has my utmost appreciation for helping achieve this outcome. Excellent work! Julian Warowioff, Managing Director UK, Lemonaid Beverages Ltd

How we can help

To discuss how we can help you in managing VAT, Duty and other indirect taxes, please contact us to arrange to speak with one of our specialists.

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