Navigating HMRC Queries on DDP Import Tax Responsibilities

Greetings, As the bookkeeper handling VAT reclaim compliance with HMRC, I am facing a query regarding a recent transaction involving goods imported from China under DDP (Delivered Duty Paid) terms. Context: A UK-based company has procured items from a Chinese supplier, and the transaction was conducted under DDP, indicating that the seller should be responsible for all associated duties and taxes. Current Issue: HMRC has raised questions about the absence of recorded customs duties and VAT payments for this shipment. Inquiry: Is it appropriate to reference the DDP terms to explain this discrepancy? Given that DDP places the obligation of paying all import taxes on the seller, the UK company should not need to account for these costs directly. If the seller adhered to their responsibilities under the DDP agreement, then the requisite customs duties and VAT should have been remitted beforehand. Any guidance on how to respond to HMRC regarding this matter would be greatly appreciated. Thank you for your assistance!

Hi DDP terms are often misunderstood and misapplied . Whilst the seller may pay duties and possibly import VAT it is unlikely that they will take the responsibility as the importer. This will usually be the recipient. Often VAT is excluded from this DDP interpretation particularly if the recipient is VAT registered. It is the importer who is legally responsible for the accuracy of a customs declaration done in their name. From your question your customer is unable to confirm the actual import VAT declared and paid. The recipient cannot rely on the supplier invoice with DDP terms as evidence of import VAT payment especially if no UK VAT number for the seller is shown. If the VAT number of the recipient/ importer is quoted on the import and the VAT is paid a c79 document will be available via the VAT registered persons government gateway account. It is also possible that the VAT has not been paid but postponed VAT accounting (PVA ) has been used. In which case there is vat to account for in the VAT return. It is the C79 or Postponed VAT statement that will indicate the import VAT amounts. It is usually these documents that HMRC will expect to see during an audit. Guidance on import VAT recovery and how to access the c79 or PVA statement is below https://www.gov.uk/guidance/manage-your-import-duties-and-vat-accounts https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad

Hi hdstockimages Genevieve,
If the Chinese business has imported the goods under these terms then they would have paid the VAT and duties for you.
The freight agent would normally produce paperwork for you with a copy of the import declaration which will show the VAT and Duty.
I would recommend sending this evidence from the freight company and also reference the DDP terms when replying to us.
Thank you.