What is a Duty Deferment Bond

If you are importing goods in the UK, you may have to pay import duties to HMRC. This is usually required at the time the goods enter the country. However, if you have purchased a duty deferment bond, HMRC will allow you to defer payment for up to 45 days. 

In recent years, HMRC has relaxed its rules on requiring a financial guarantee before offering a duty deferment account to importers. Before applying for a duty deferment bond, find out if you can get a guarantee waiver. 

If you are looking for a partner who can help you with your surety related to your import finances, contact FinCred IS today. 

What Are The Benefits of a Duty Deferment Bond

It will take time after the goods have been imported to sell them. However, import duties are paid when goods enter the country, not when the goods are sold. This can have a negative cash flow impact on suppliers of imported goods. The duty deferment will give you time to recover the costs of the import through sales before HMRC requires the payment.

How Does A Duty Deferment Bond Work

As with all surety bonds, there are three parties involved in a duty deferment bond. They are:

  • The principle, who purchases the bond, is the importer 
  • The obligee, who benefits from the bond, is HMRC
  • The surety, who pays out the bond value if needed, is the insurance or surety company

If a bond is purchased by the importer, HMRC is covered by any loss caused by the importer being unable to pay. This additional security for HMRC allows them to extend more generous payment terms. 

What Happens If HMRC Does Not Receive Payment From The Importer

HMRC will activate the bond, and receive compensation from the insurance or surety company. The insurance or surety company may be able to pursue the debt against the importer. Therefore, it is very important that all duties are paid to HMRC in the timescale you are offered. 

Any other questions? [H2]

To find out how to receive your duty deferment visit the HMRC website: How to set up an account to defer duty payments when you import goods. 
Contact FinCred IS today to find out more about duty deferment bonds and receive a quote.