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What You Need to Know About Simplified Import VAT Accounting

Dec 2, 2022 9:00:00 AM

Simplified Import VAT Accounting (SIVA) can be an excellent way for established importers to free up their cash flow and save time on customs clearance processes.

To take advantage of this program, there are specific criteria you must meet. So, what is Simplified Import VAT Accounting, its requirements, and how does the SIVA application and approval process work? Here’s everything you need to know.

What is Simplified Import VAT Accounting?

Simplified Import VAT Accounting allows companies or agents to operate a duty deferment account for VAT purposes, with a reduced level of financial guarantee required.

According to HMRC, the program’s purpose is to offer compliance cost savings for businesses by reducing the level of financial security required to guarantee payment of import VAT. (Note: If you’re using postponed accounting for import VAT, you don’t need to use SIVA.)

A successful SIVA application allows applicants to operate at a 0% guarantee for import VAT purposes only. The level of security required for your deferment VAT account and the maximum amount you can defer in any month will be based on current or anticipated liabilities.

While SIVA is a great way to increase cash flow, only some are eligible for the program, and you must meet specific requirements to be approved.

What are the benefits of SIVA?

There are several key benefits to applying for and being granted approval for SIVA. These include:

  • Savings on compliance costs where a guarantee was previously required. 
  • Reduced security requirements and costs, which helps improve the competitiveness of U.K. importers of all sizes.
  • Reduced levels of financial security, which means you can release funds for other uses, such as commercial borrowing or investments.

What are the requirements for SIVA approval?

The requirements for SIVA approval are lengthy, but many businesses will quickly meet the stipulations — and if you’re not yet eligible to apply, take note of when you may be qualified.

The conditions for a successful SIVA application are as follows:

  • You must be VAT registered and continuously traded for at least three years. Note: There are some cases in which a business with fewer than three years may be considered, but it will be subject to further financial credibility checks.
  • You cannot be in debt with the HMRC at the time of your application, and you should have a clean debt history.
  • You cannot have serious offences on record with the HMRC (proven or charged) within the last three to five years.
  • You must maintain a 100% guarantee for any customs or excise charges (or both) that you incur, and you must ensure the Deferment Account Limit is operated within its approval limits unless you are approved for a guarantee waiver for duty deferment.
  • You must not have defaulted on your duty deferment payment record more than once in the year before application. 
  • You must have a good VAT compliance history, which is based on the number of errors made on VAT returns, the timeliness of rendering VAT returns, and the number of assessments raised on missing VAT returns.
  • You must not have default surcharges in the 12 months before applying.
  • You must not have had any Transfers of Going Concerns within three years of the application period.
  • You must prove financial solvency and show that your business is not in administration, liquidation, insolvency, bankruptcy, receivership, or financial difficulties. 
  • You must submit a liquidity risk assessment.
  • You must demonstrate a high level of records management.

Ready to put in your SIVA application?

Once you’ve ticked off each item on the list above, you can fill out the application and questionnaire, which you’ll need to send via post and email. 

HMRC reserves the right to take up to 120 days to consider an application, but it usually issues a decision within 30 days.

Once your SIVA application is approved, here’s what you can expect:

It’s important to note that as of 1 October 2022, you can no longer make import declarations on the Customs Handling of Import and Export Freight (CHIEF) system. Instead, you must use Customs Declaration Service. If you previously used CHIEF, your existing customs authorisations have been moved to CDS, and you don’t need to apply for a new authorisation. 

If you have any questions or need help with your application, please reach out. If you’d like to learn more, read the full description of SIVA from the HMRC, and drop us a line.

Need help with your SIVA forms, or want us to get started on them for you? Contact us today.

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