A duty deferment account lets an importer, or an agent acting for one, pay Customs Duty, excise duty and import VAT in one monthly Direct Debit instead of paying for each consignment as it is cleared. In Great Britain most traders established in the UK can now get a guarantee waiver, so the bank guarantee that used to be compulsory is often no longer needed. The account only works within its monthly limit, and once that is used up every further declaration must be paid for at once.

What does a duty deferment account actually do?

Without a deferment account, the charges on each import declaration have to be paid before HMRC releases the goods, either immediately or from a cash account on the Customs Declaration Service. A deferment account replaces those individual payments with a single Direct Debit each month. HMRC’s guidance describes the benefit as an average of 30 days credit, with deferred charges paid between 2 and 6 weeks after they were incurred, and quicker clearance because HMRC does not have to handle a payment for every transaction.

The charges that can be deferred include:

  • Customs Duty, including anti dumping and countervailing duties
  • import VAT
  • excise duties, including Tobacco Products Duty, and the VAT on excise goods
  • interest charged on customs debts

The same account can also be used to defer duty on goods released from an excise warehouse, which is explained in our guide to excise warehouses and duty suspension. HMRC does not charge for setting up the account.

Do VAT registered importers still need one?

Often not for VAT. A VAT registered business can use postponed VAT accounting to declare and reclaim import VAT on the same VAT return, and HMRC’s guidance says you do not need a deferment account to defer import VAT if you use postponed accounting. You can apply to defer import VAT through the account only if you are not VAT registered, or you are registered but not accounting for import VAT on your return.

The account is therefore mainly about Customs Duty and excise duty. A business importing goods with a meaningful duty rate, or excise goods such as alcohol, still gains the monthly credit even when its VAT goes through the return. The differences between the two charges are set out in import VAT and customs duty compared.

When is the monthly payment taken?

Customs Duty and import VAT deferred during a calendar month are collected together. For declarations made on the Customs Declaration Service, payment is taken on the 16th of the following month, or the next working day if the 16th is not a working day.

Excise duty runs to a different period. The excise accounting period runs from the 15th of one month to the 14th of the next, and payment is due on the 29th of that later month (28 February in a non leap year), or the working day before if that date is not a working day. Registered consignees follow the customs period instead.

Payment must be by Bacs Direct Debit in sterling. If a month’s total is over £20 million, HMRC asks the account holder to contact the Duty Deferment Office about paying by CHAPS. Statements are available online 3 working days before the Direct Debit is taken, and import VAT certificates (C79) for VAT paid through the account are published monthly, usually by the 10th working day, and can only be viewed online for 6 months.

Is a bank guarantee needed?

The default position is that deferment must be secured. If you do not apply for, or are not granted, a guarantee waiver, the guarantee must come from a financial institution established in the UK and regulated by the Prudential Regulation Authority. HMRC’s guidance says not to send a guarantee until HMRC asks for one after you have applied.

In Great Britain a waiver can be applied for with the account application or added to an existing account. The legal basis is regulation 43 of the Customs (Import Duty) (EU Exit) Regulations 2018, which lets HMRC approve deferment without a guarantee for an authorised economic operator, or for a person who meets the relevant AEO criteria, is solvent and is established in the UK, subject to a monthly limit.

Who qualifies for a waiver?

HMRC’s published conditions are:

  • no serious or repeated infringements of customs or tax rules in the past 3 years
  • no record of serious criminal offences relating to the business in the past 3 years
  • positive net assets, excluding goodwill, at the date of application and throughout the past 3 years, or the trading period if shorter
  • for a waiver over £10,000 a month, net assets excluding goodwill greater than the waiver amount, both at the application date and at the latest balance sheet date
  • being established in the UK for customs purposes

There are two levels: a waiver of up to £10,000 a month, and a waiver for a specified amount above £10,000. Applicants for the higher level complete form PFS1 with supporting financial documents. Applicants for the lower level must give extra financial information if they do not file accounts at Companies House, for example a sole trader or general partnership, or if they file consolidated accounts. A business holding AEO customs simplification status qualifies for a waiver at the level of its deferral limit and does not upload a PFS1.

A business that needs more than £10,000 a month but fails the full waiver test can still take a partial waiver of up to £10,000 and guarantee only the excess. A business established outside the UK can still have a deferment account for Great Britain, but only with a guarantee.

How do you apply and what happens next?

You will need an EORI number, company and VAT details, details of directors and officials, the person responsible for customs authorisations and their practical customs experience, and an estimate of the monthly debt. HMRC aims to decide within 30 working days once it has everything, longer if a financial guarantee is involved.

If approved, you receive a deferment approval number and must complete a Direct Debit Instruction to activate the account, even if you do not plan to use it straight away. If the deferral limit you asked for is higher than the waiver you qualify for, HMRC will offer the choice of guaranteeing the gap or accepting a lower limit; if you do not reply within 30 days the application may be rejected. A rejection carries the right to a review or appeal.

If an agent makes your declarations, you can authorise them to use your deferment approval number on the Customs Declaration Service, so that your charges go through your own account. The position of agents who use their own accounts is covered in customs intermediaries: direct and indirect representation; HMRC warns that an agent acting in its own name is jointly and severally liable for the customs debt.

What happens if the limit is exceeded?

The limit is a calendar month limit. HMRC will not allow deferment if the limit has already been reached, or if the amount left does not fully cover the charges on the declaration. The whole declaration then has to be paid by another method, and clearance is delayed until it is. Once the limit is exceeded, nothing more can be deferred until the limit is increased or a new calendar month starts. Persistently exceeding the limit can lead to suspension and revocation of the facility.

Illustration only. An importer has a monthly deferral limit of £50,000. By 25 March it has deferred £44,000. A container arrives with £9,000 of Customs Duty and import VAT. Because £6,000 is left and that does not cover the £9,000, none of it can be deferred and the full £9,000 has to be paid before release. The £44,000 deferred is collected by Direct Debit on 16 April, or the next working day.

What are the common mistakes?

  • Setting the limit by average months. Peak season or a single large shipment is what triggers refusals, and HMRC’s guidance stresses having the right level for peak liabilities.
  • Letting the Direct Debit fail. HMRC will suspend the account until payment and a valid instruction are received, may charge interest on late customs debts and may revoke the facility, subject to appeal.
  • Changing bank carelessly. A new Direct Debit Instruction must reach HMRC at least 10 days before the next payment day, and the old one must not be cancelled until the new one is in place.
  • Not reporting changes. A change of name, address, VAT number or legal entity must be reported straight away, and a waiver holder who stops meeting the conditions must amend the account and provide a guarantee or close it.
  • Using a Great Britain account for Northern Ireland. Northern Ireland deferment requires a separate account backed by a Customs Comprehensive Guarantee.
  • Expecting overdeclared import VAT back from HMRC. HMRC does not normally repay it to VAT registered traders; it is recovered through the VAT return under the normal input tax rules.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.