HMRC & Duty Deferment Guarantees
What is a Duty Deferment Guarantee?
A Duty Deferment Guarantee is a financial security required by HMRC when a business wishes to operate a duty deferment account. This account allows importers to delay payment of customs duties, import VAT, and excise duties, typically settling them once a month instead of at the point of import.
At PSS, we help clients secure the necessary guarantee from a surety provider, giving HMRC confidence that the deferred duties will be paid in full and on time, even in the event of default.
We ensure fast, competitive solutions tailored to your business’s trading volumes and credit profile, keeping goods moving and cash flow healthy.
Key Features
01
Improve cash flow by deferring upfront payments
02
Simplifies customs processes with consolidated monthly billing
03
Essential for importers, wholesalers, and freight forwarders
What is a Bond?
Placing your first bond? Or just need a refresher? Read on for the what’s what of surety bonds.
Surety protects a business from financial losses, usually caused when one party fails to fulfil their end of a contract. By placing a surety (usually in the form of a bond), a business makes sure that all the project bills will be paid on time should there be any disruptions or problems fulfilling the contract.
Principal
The Principal is the business placing the bond. They are making a promise to the Obligee. To them, the Surety bond is like insurance.
Surety
The Surety promises to pay the Obligee should the Principal not do as they promise.
Obligee
The Obligee is the party that requests the bond from the Principal.
When might a Duty Deferment Guarantee be required?
A Duty Deferment Guarantee may be required when a business wants to defer payment of import duties, VAT, or excise duties, rather than paying them immediately upon goods entering the UK.
Common situations where they needed:
- When applying for a duty deferment account with HMRC
- If your monthly deferred payments exceed £10,000 for VAT or £5,000 for duty
- When importing large volumes of goods on a regular basis
- If HMRC assesses that a guarantee is necessary based on the business’s financial standing
- For freight forwarders and customs agents acting on behalf of importers
Why is it important?
The guarantee gives HMRC security that they’ll recover the owed duties if the business fails to pay. It’s often a requirement to use simplified customs procedures and streamline the movement of goods across borders.In short, if your business is regularly importing and wants to optimise cash flow and customs efficiency, you’ll likely need a Duty Deferment Guarantee.
Can PS Surety help?
PS Surety is a dedicated surety bond brokerage and we would be delighted to assist any contractor with placing performance bonds. We are fully regulated by the FCA and we guarantee that we provide our clients with:
The best possible terms available in the market
An honest, open and joint approach to our client’s Surety needs
Detailed client dashboard providing information on every bond ever placed
Communication when bonds become overdue
A single touch point within our organisation for wording reviews, quotes and queries
Rapid responses
That sounds expensive!
Our service is completely free to contractors. We are paid a commission by the surety providers on each bond that we place with them on behalf of our clients, the details of which are fully disclosed in our client dashboard.
The surety providers are happy to pay our commission because we specialise in bringing them business which fits their ever changing underwriting criteria. We also deal with frequent queries, wording issues, bond drafting and general administration.
The price that you pay PS Surety for a bond is the same price that you would pay any Surety if going direct.
Frequently Asked Questions – Duty Deferment Guarantee
What is a Duty Deferment Guarantee?
A Duty Deferment Guarantee is a financial guarantee provided to HMRC by a surety on behalf of an importer. It allows businesses to defer the payment of customs duties, VAT, and excise duties, typically settling these in one monthly payment instead of at the point of import.
When is a Duty Deferment Guarantee required?
A guarantee is usually required when:
- Your deferred VAT exceeds £10,000 per month
- Your duty liability exceeds £5,000 per month
- HMRC assesses that your financial standing requires one
- You’re a freight forwarder or customs agent operating a deferment account
How does the guarantee work?
If the importer fails to pay the duties owed to HMRC, the surety provider steps in to cover the payment up to the guaranteed amount. The importer is then liable to repay the surety provider.
What are the benefits of a Duty Deferment Guarantee?
- Improves cash flow by deferring upfront payments
- Enables simplified customs clearance procedures
- Consolidates duty and VAT payments into a single monthly payment
- Avoids disruption at ports or borders by ensuring compliance with HMRC requirements
How much does a guarantee cost?
Costs depend on:
- The size of the deferment facility
- The financial strength of the applicant
- The perceived risk by the surety provider
Typically, the cost is a small percentage of the guarantee amount, payable annually. This is usually between 1% and 5% of the guarantee amount.
How can I get a Duty Deferment Guarantee?
Simply get in touch with PSS. We’ll guide you through the process, help you prepare the necessary documentation, and secure the most competitive terms from a panel of leading surety providers.
Can PSS help if HMRC has already requested a guarantee?
Yes! We work with businesses at all stages of the process, whether you’re applying for a deferment account for the first time or need to respond quickly to an HMRC requirement. We specialise in fast turnarounds and tailored support.
HMRC & Duty Deferment Guarantees Made Simple
We simplify placing bonds with a personalised service and the best price available in the market.