In this section:

You are here:
Home >
VAT >
VAT and international trade >
Reduce the financial guarantees you provide for import duty and VAT

Reduce the financial guarantees you provide for import duty and VAT

If you are involved with importing goods into the UK then you may have to make regular payments of VAT - as well as import duty - due on the imported goods. To speed up and streamline this process, you can use the Duty Deferment Scheme. This lets you pay what you owe us each month in a single payment.

If you use this scheme, you need to give a financial guarantee to make sure you can meet the cost of any VAT and duties due on imported goods. To help businesses keep their costs down, we can sometimes reduce the amount of this guarantee so it only has to cover customs and excise duties, and not the VAT. We do this under the Simplified Import VAT Accounting (SIVA) scheme.

This guide explains how SIVA could help your business reduce its financial guarantee costs, and how you apply for it.

On this page:

SIVA - the basics
Conditions for SIVA approval
How to apply for SIVA
Operating SIVA once you've been approved
SIVA and agents

SIVA - the basics

The aim of the SIVA scheme is to reduce the costs that you face when you import goods into the UK. SIVA does this by reducing the amount of financial guarantee you have to provide if you use a scheme to defer paying any VAT and duties due on the goods.

If you are an importer, agent or warehouse keeper, you can use the Duty Deferment Scheme to pay any VAT and duties due on imported goods on an agreed payment day each month, instead of at the time of importation. To use the scheme, you must show us that your bank, building society or insurance company will guarantee the maximum amount of VAT and duty you'll owe at any one time.

If your business is authorised to use the Duty Deferment Scheme - or it's about to apply for authorisation - you may be able to reduce the amount of financial guarantee you need to provide by also applying for the SIVA scheme. Businesses that we authorise to use the SIVA scheme don't have to guarantee the VAT they defer on imports - just the duties.

SIVA authorisation isn't automatic. To get it, your business will need to be VAT registered and meet certain other conditions. If you do become SIVA approved, you'll need to operate the scheme correctly and continue to meet our conditions.

If your business gets SIVA approval, you'll still have a maximum deferment limit each month, but your guarantee will only have to cover the amount of duties you defer - you'll be able to defer the VAT without having to provide any security.

More about the applying for and using the Duty Deferment Scheme in Customs Notice 101

Top

Conditions for SIVA approval

To get SIVA approval you'll need to show us that your business meets certain conditions.

Duty deferment account. You'll need a current duty deferment account. If you don't already have a duty deferment facility set up, it's best to apply for SIVA first - this avoids you having to make any changes to your duty deferment guarantee. To qualify for the facility, you'll have had to be active - and compliant - in international trade during the past 12 months, in addition to the other conditions, and we'll carry out extra checks to determine whether you can meet your future deferment payments.
VAT registration. Your business will need to have been VAT registered for at least three years.
Debt history. If you're in debt to us when you apply for SIVA we can't approve your application.
Offences. If our records show we've recently charged you with a serious offence then you won't be eligible for SIVA. You can re-apply three years after the offence action has been finalised - five years if a prison term was imposed.
Deferment account history. We'll check your duty deferment payment record. If you've defaulted on payments more than once in the last 12 months we'll turn down your SIVA application. You can apply again 12 months after your last defaulted payment.
VAT compliance history. You'll need to have a good VAT compliance history. We'll look at the number of errors you've made on your VAT returns, how quickly you sent them in, and the number of assessments we've raised on missing VAT returns. If you've made large or frequent under-declarations of VAT in the last three years we can't approve your SIVA application. You can re-apply three years after the date of your last under-declaration.
Default surcharges. If you've incurred any default charges in the 12 months before you apply for SIVA authorisation then we can't approve your application. You can re-apply once your last recorded surcharge has been spent.
Transfer of a going concern. If your business has been transferred as a going concern, then you can only apply for SIVA if this happened more than three years ago, or if the transfer only happened because of a change in legal status, for example, becoming a limited company.

Financial viability

In addition to the above, we won't approve your business for SIVA if it's in:

administration
liquidation
insolvency
receivership
other financial difficulties

If you don't meet the conditions above, you can apply for SIVA once your business:

no longer owes us any money
is out of financial difficulties
has been compliant for three years

Additional checks

If you haven't had a deferment account before we may want to carry out additional checks so we're satisfied you'll be able to meet future deferment payments. We'll need to see your last two years' audited accounts, and we might ask for a credit check on your business.

Top

How to apply for SIVA

Once you're happy that your business should meet the conditions for SIVA approval, you can complete an application form and send it to us at the address on the form.

Once we get your form we should send you a notice of our decision within 30 days. If we can't send you a decision within this time, we'll send you an acknowledgement of your application.

Until we write to tell you that you've been approved to operate your SIVA account, you must maintain a 100 per cent guarantee to cover both import and excise duties and import VAT. If you don't, we could delay your goods at importation until you've paid all deferred charges.

If you don't get approval for SIVA, you can apply again at any time.

Apply for SIVA by obtaining form SIVA 1 Application for Simplified Import VAT Accounting (SIVA)

Find out more about applying for and operating your duty deferment account for SIVA

More than one deferment account

If your business has more than one deferment account number (DAN) you'll need to apply separately to operate SIVA on each DAN. A reduced deferment account guarantee level on one DAN doesn't automatically apply to any of your other DANs.

Top

Operating SIVA once you've been approved

If we give you SIVA approval, we'll send you an approval letter that includes the following:

an explanation of why we approved your application
information about how your SIVA approval affects your duty deferment account
a deferment schedule
information for agents
form C1201 Guarantee of payment of sums due
form C1201A Notice of amendment to C1201 deferment guarantee

The first thing you'll need to do is complete and return forms C1201 and C1201A as soon as possible. We'll need to make any necessary changes to your deferment account limit so that you can start operating SIVA as soon as possible.

To work out what deferment guarantee level you'll need in place once you're SIVA approved, think about the following:

What will be the maximum amount of import VAT, customs duties and excise duties you'll defer through your account in a calendar month?
How do the deferment account limit and deferment guarantee limit you'll need for the SIVA reduced guarantee scheme compare with the guarantee you're currently providing?

The deferment schedule we'll send you will help you work out how much you can reduce the guarantee you're currently operating. Filling in the schedule will help you arrive at the right account limit for deferring your future charges. It'll also help identify the proportion of this limit you'll need to continue to guarantee.

Remember that the figures you put down on the schedule must reflect what you think your maximum deferred charges will be in any calendar month.

Once you've completed the schedule and your new or amended guarantee form, send it to us the address on the form. If you don't send the schedule and revised deferment guarantee limit back to us promptly, we'll re-check your records to make sure you still qualify for SIVA approval.

If you decide you don't want to go ahead with your SIVA approval, please return your approval letter to our SIVA Approval Team at the address shown on your application form along with a letter explaining why.

Keeping compliant

Once you've been authorised to use SIVA, you'll have to carry on meeting the conditions for approval, or we could suspend or revoke your approval at any time. If that happens, you'll have to produce a 100 per cent guarantee, immediately, to cover all further VAT liabilities. If you don't, we'll reduce your deferment account limit, or even suspend it altogether.

Find out more about paying and reclaiming VAT on imports

Top

SIVA and agents

Any agent can apply for SIVA. It doesn't matter what capacity you act in.

If you're an agent and you use the SIVA scheme it won't affect your current provisions for liability on customs debt. These are still governed by the Community Customs Code. This means that if you're an 'indirect' agent who acts in your own name, you're jointly liable with your client - the principal - for the customs debt. But if you're a 'direct' agent who acts in your principal's name you aren't liable for the customs debt. We'll treat any payments you make from your deferment account as payments on behalf of your principal.

We trust authorised SIVA agents to meet any liabilities that are set against their deferment accounts. If they don't meet these liabilities then we'll take away their SIVA approval.

Duty of care

If you're acting as an agent for SIVA it's important to check who you're doing business with. SIVA may be desirable to fraudsters.

We advise you to carry out checks to ensure your customer is legitimate, so you don't get caught up in a fraud where import VAT would go unpaid. There are a number of checks that you probably already undertake in line with good commercial practice such as credit checks. We don't expect you to go beyond what is reasonable - however, we would expect you to make a sound judgement on the integrity and reliability of your customer.

The checks you may make and their extent will vary depending on the individual circumstances and your existing knowledge of your customer. We can't tell you exactly what checks you should make, and in any case, a definitive list would just tell fraudsters exactly what they need to do to fool you.

Factors you may wish to include:

The type and level of checks you carried out to establish the integrity of the customer and the action you took as a consequence of those checks.
The nature of the supply - certain goods such as mobile phones are favoured by fraudsters.
Aspects of payment arrangements and conditions.
Details of the movement of goods involved.

If you think any transaction you're involved with might be suspect you can contact our free 24-hour Customs Hotline on Tel 0800 595 000.

Top