Trading in Common Agricultural Policy goods

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Introduction

The Common Agricultural Policy (CAP) originated in 1962, during the early days of the European Community (EC), to ensure food security and to protect European interests in the international food trade. CAP, which has been reformed, maintains commodity price levels within the EC by taxing imports and subsidising exports.

This guide explains CAP trading procedures and tells you whether the goods you plan to import or export fall under the CAP. You can also find out how to obtain a CAP licence and how to claim a refund.

You can alternatively go straight to specific detailed guidance on Importing CAP goods or Exporting CAP goods.

What are CAP goods?

The CAP covers a broad range of food and agricultural produce, including basic food products and inedible organic products. In general, CAP covers basic products and commodities, as well as processed and manufactured food and drink. You can find out about the concept of CAP in Notice 780 on the HM Revenue & Customs (HMRC) website.

The main basic products and commodities covered by CAP are:

meat and poultry products
sugar
fish and dairy products
cereals and rice products
products of the milling industry such as flour
fruit and vegetables, nuts, grains and seeds
wine and spirits
milk and milk products

These products, along with inedible organic products including live trees and other plants, bulbs and roots, cut flowers, un-manufactured tobacco, cork, flax and hemp are known collectively as ‘Annex I goods’.

You can find information on definitions and a list of CAP goods on the HMRC website.

Non-Annex I goods

CAP also covers goods manufactured from the basic products listed above on this page, including glycerol, sugar confectionery, preparations of malt extract, pasta products, tapioca and sago, puffed rice and similar products, bread, pastries, biscuits, sauces and soups. These are referred to as ‘Non-Annex I goods’.

Identifying goods which need a licence

Using your commodity code (which you can identify by using the UK Trade Tariff), you can check annex II to EC Regulation 514/2008 to find out whether a CAP licence is required to import or export goods.

Find a guide on agricultural goods which require an import or export licence on the Rural Payments Agency (RPA) website. For further help identifying whether you need a licence contact the RPA External Trade Helpline on 0191 226 5050.

Find the Trader’s Guide to Importing and Exporting CAP Goods on the RPA website.

CAP import licences

CAP licences provide much of the information required to manage the EC agricultural market sectors. Many agricultural goods cannot be imported into the EC without a valid CAP licence. You can find out about customs procedures for importing CAP goods in Notice 780 on the HMRC website.

Some CAP products imported from outside the EC are controlled by quotas. Quotas allow goods to be imported at reduced rates of duty. To be eligible for quotas you must have a CAP import licence which quotes the specific EC Regulation that created it. If you are not eligible for the quota, you may still need a non quota licence to import the goods. CAP quotas all have numbers known as Order numbers - these all begin with 09.4XXX. Quotas having a number other than 4 as the third digit do not require a quota licence (although a non-quota licence will be required if it relates to a commodity for which licences are compulsory) - these quotas are known as ‘first come first served’ and are available for use by anyone provided the quota has not been used up.

Find a guide on agricultural goods which require an import or export licence on the RPA website.

CAP licences aren’t required for goods already in free circulation, those where the quantities are less than the amounts shown in Regulation 514/2008, or where goods are eligible for Inward Processing. See Inward Processing for further information. Goods in customs warehousing don’t require a CAP licence as, technically, they haven’t yet been imported - however, once they’re removed from the warehouse into free circulation, a licence may be required. CAP traders can use this beneficial customs procedure to allow for paperwork to be sorted out, or wait for a time window in which a particular quota is available. See Importing CAP goods.

The RPA issues CAP licences in the UK. Licences issued by the RPA can be used elsewhere in the EC and a licence issued elsewhere in the EC can be used to import into the UK.

To apply for a licence, you need a Customer Registration form from the RPA. You can find the Customer Registration form on the RPA website.

You may need to provide a financial security which usually takes the form of a bank guarantee. You’ll lose this money if the quantity of goods for which the licence is issued isn’t imported. The RPA handles payments made for licences requiring a security - but if a paper one is issued, you must look after it as obtaining duplicates is a lengthy process.

Most licences issued by the RPA are electronic and are held on HMRC’s Customs Handling of Import and Export Freight (CHIEF) system. Paper licences, or extracts from electronic ones, will be issued for use in other member states. Paper licences issued in other member states which will be used to import in to the UK can be converted to electronic ones by sending them to the RPA with a request to them to do this. This is optional though, as a paper licence is also acceptable.

Under the terms of your licence, you’re required to keep a record of how much of the licensed quantity you have used up so far. You also need to retain key documents relating to all your transactions for at least three years. See archiving your trade documents.

Valuing your goods

There are several ways to work out the value of your imports. See how to value your imports for customs duty and trade statistics.

If you are importing fruit and vegetables, and have not already set a price with your seller, you may be able to use simplified procedure values (SPVs) or standard import values (SIVs), prices set by the EC. Read about SPVs and SIVs in How to value your imports for customs duty and trade statistics.

Find the Trader’s Guide to Importing and Exporting CAP Goods on the RPA website.

CAP export licences

For some commodities an export licence is required when you want to export CAP goods from the EC. If a licence is required for your goods and it isn’t presented to Customs at the time of export, your consignment won’t be allowed to leave the UK. However a licence for these commodities is not required for supplies to ships, drilling platforms, some armed forces stationed in EC member states and low-value exports. If you’re in doubt about whether you need an export licence, contact the RPA for guidance. You can find out about the system of CAP export licensing in Notice 800 on the HMRC website.

You can find information on definitions and a list of CAP goods on the HMRC website.

Find the Trader’s Guide to Importing and Exporting CAP Goods on the RPA website.

If the market price of the commodity you are exporting is lower than in the destination country than it is in the EC, it is possible that you may be eligible to a CAP refund. Refunds are managed by the EC and are suspended, created, raised or lowered depending on market conditions. It is possible for refunds for the same product to vary depending on which country they are exported to. These are known as differentiated refunds. You must have an export licence for all goods eligible to a CAP Refund.

The method of applying for a CAP export licence is similar to that used for obtaining import licences. CAP licences in the UK are issued by the RPA. To apply for a licence, first obtain a customer registration form from the RPA. Once you’re fully registered, you’ll need to use your registration details on your export licence application. You can access the customer registration form on the RPA website.

You can find out about customs procedures for exporting CAP goods in Notice 800 on the HMRC website.

As with imports, licences are issued against a security, which usually takes the form of a bank guarantee. The security is forfeited if the quantity of goods for which the licence is issued isn’t exported. The RPA handles payments made for security licences, and makes deductions if licences are not fully used. Licences issued in other member states are valid in the UK. There are several types of CAP export licence:

Export licences with advance fixing of the refund, sometimes known as World Trade Organisation licences, set the rate of refund you can claim in advance, which can help you manage cashflow. You apply in the same way as for a normal licence, but indicate on the application form that you wish to fix your refund in advance.
Refund certificates are licences for processed goods, also known as ‘Non-Annex I goods’.
Mandatory export licences are used when exporting sugar, cereals and rice. These licences are required regardless of whether they are eligible for a CAP refund or not.
Tender licences are for traders who have quoted (‘tendered’) for supplying goods to military or public authorities outside the EC and are waiting to hear whether their tender has been accepted. They allow traders to apply for a licence in advance so they can supply goods at short notice if the tender is successful. You need to have security in place before you apply for a tender licence. Your deposit will be refunded if your tender bid is unsuccessful.

You can find details of the licence requirements for specific goods from the RPA. See exporting CAP goods. You can find the leaflet you need for specific CAP goods by selecting the food category section from the external trade page of the RPA website.

CAP export procedures

There are key steps for traders to follow in the CAP export procedure. These include:

your CAP licence application. Once the RPA has issued a licence to you, the details will be automatically sent to the HMRC computer system called CHIEF. You can find out about CHIEF in UK’s import and export processing system CHIEF.
inputting your export declaration into CHIEF. Once you have received a CAP licence, you need to declare your exports to HMRC before moving the goods.
claiming a refund from the RPA. Once your details have been passed to CHIEF, the refund process can begin.

CAP goods can be exported in one of two ways - under the frontier procedure or under the Local Clearance Procedure (LCP). Under LCP, customs clearance of exports is carried out at approved inland premises rather than ports. You can only use LCP if you’re approved to use the system by HMRC. You can see a guide to CAP export procedures on the HMRC website.

If you’re sending the goods via another EC member state and wish to claim an export refund, a completed form T5 must also accompany your goods to prove that your goods do eventually leave the EC. Customs in the country where the goods finally leave the EC will send the form T5 to the RPA (via HMRC) to provide them with proof of export.

If you’re applying to the RPA to claim differentiated CAP refunds you need to provide both proof of export from the EC and proof of import into the destination country.

Customs in the country where the goods finally leave the EC will send the form T5 to the RPA (via HMRC) to provide them with proof of export.

Find form T5 for European Community Transit movement of CAP goods on the HMRC website.

Customs export documents must be signed by:

an officer of the company that is exporting the goods
an authorised employee
an authorised agent

A digital signature may be used on electronic documents.

Documents need to be returned within 12 months in order to claim differentiated refunds. You can apply for an extension to this time limit. If documents are returned during the six months after the time limit, only a partial refund will be paid. After that, refunds can no longer be paid.

Find the Trader’s Guide to Importing and Exporting CAP Goods on the RPA website.

Levies and refunds on CAP goods

Refunds on CAP goods are given to reduce a trader’s price of their exported EC goods to world-market level.

Levies, on the other hand, are used to increase the price of goods exported to countries outside the EC to the EC market level. This helps to ensure that a regular supply of goods remains within the EC. Since EC prices rarely fall below world-market level, in practice export levies are rare.

Levies don’t apply to processed goods, victualling supplies (supplies for ships at sea), food aids and other specific types of goods. You can find trader advice about refunds and levies in Notice 800 about CAP exports on the HMRC website. If levies apply to your exports, they’re due at the time the goods are exported. However, payment may be deferred if the amount due is covered by any CAP securities you have already paid.

Export refunds are paid by the RPA, and they will need to know that your exported goods were:

as shown on the refund application form
exported from the EC within 60 days of the date of acceptance of the customs declaration
in free circulation
not altered while in customs control
of EC origin and of marketable quality

Refund payments are due to traders either when goods leave the EC, or when they’re delivered to a specific place such as an aircraft or victualling warehouse. Undifferentiated refunds become payable when the goods leave the EC. For differentiated refunds, you must submit transport documentation and proof of import documentation to the RPA before the refund can be paid.

Download the customer guide to securities and guarantees from the RPA website (PDF, 1.02MB).

Time limits apply. You must export your goods from the EC within 60 days of HMRC accepting your declaration, and you must submit your paperwork to the RPA within 12 months of export, although you can apply to have the documentation deadline extended.

Trading in CAP goods with other EC member states

You generally don’t need CT documents for goods moving within the EC. If you’re exporting via (or to) a EFTA country, CT procedures apply and the NCTS will be used.

For consignments exported to entitled destinations within the EC, HMRC can give you approval to use a procedure known as scheduling. You should use HMRC form C1226A/C1227A. You can complete form C1226A for an export refund consignment schedule on the HMRC website.

There are special arrangements for consigning goods to the Canary Islands, the Channel Islands, French Overseas Departments (Guadeloupe, Martinique, French Guiana, Reunion) and the Isle of Man.

Export licences aren’t normally required, and export refunds therefore aren’t normally available. For full details, see pages 65-67 of the RPA guide for traders in CAP goods. You can find the trader’s guide to importing and exporting CAP goods on the RPA website.

Suspensions and quotas on CAP goods

CAP refunds are sometimes suspended when market conditions change.

Quotas work by reducing duty on certain imported goods. Quota licences are required if the quota has an Order number beginning 09.4XXX.

Import tariff quotas are often for one year and may be broken down into sub-periods. Some quotas are known as preferential quotas. To find out whether the goods you want are from preference countries, you first need to identify the correct commodity code for the product by looking it up in the Integrated Tariff of the United Kingdom, usually known as ‘the Tariff’. Once you know the commodity code, you can use the Tariff to find out what the relevant duties are. The Tariff is available for online browsing. See an introduction to the Tariff.

You must complete box 39 when claiming a quota made available through the presentation of an appropriate CAP licence. The licence and any other documentation required to support your application must be declared in box 44.

You may also be able to claim duty relief for imported CAP goods under the following schemes:

End-use relief - see end-use relief.
Inward Processing - see Inward Processing.
Outward Processing Relief - see Outward Processing Relief (OPR).
Temporary admission. You can find Notice 200 on temporary admissions on the HMRC website.

Documentation and electronic systems used with CAP goods

The standard way of making CAP export declarations and claims to export refund is electronically, using the HMRC CHIEF computer system. In almost every case, one electronic ‘document’ will be both your export declaration and your claim to export refund. You may also be allowed to keep some records on your computer. For more information see archiving your trade documents.

You will need a computer to submit your declarations. Whether the software is your own design or someone else’s, you should contact your local HMRC office at the earliest possible stage before you decide to submit your declarations online. HMRC may need to check that your computer systems will be able to meet their requirements.

The main paper documents used when importing and exporting CAP goods are:

RPA customer registration. This is the first step to being granted an import or export licence for CAP goods. To apply for a licence or receive an export refund, you first need a customer registration form from the RPA. You can find the customer registration form on the RPA website.
Form C88 (CAP) CIE. This is the customs declaration form that can be used when exporting CAP goods if you don’t have access to CHIEF. It’s used to record information such as the source and destination of the goods and the weight of the consignment, and to prove that goods have been exported when claiming refunds.
Form CAP Export CIE Control (continuation) is the continuation sheet that allows traders to comply with National Export System (NES) requirements.
Forms C1227A and C1226A are used to present information to HMRC when using the Simplified Scheduling Procedure for exports to entitled destinations within the EC.
Form T5 is used for CAP goods that are exported via the customs procedure Community Transit through another EC member state, to prove that the goods have left the EC. The form is returned to the RPA by customs officials in other member states, so that your CAP refund can be processed and paid. You can find form T5 to move your goods through the EC on the HMRC website. See Community transit: moving goods between two EU territories.

CHIEF is the main computer-based system CAP traders must use to declare their goods. NES is part of CHIEF and you must use it for your CAP exports. Information about your goods may be sent by traders or freight agents either inland at customs-approved locations, or at ports and airports on the UK frontier.

A customs entry is required for export declarations and refund claims. You must send this to HMRC in time for the goods to be examined before shipment. Any claim to export refund is made as part of this declaration under CHIEF procedures. The RPA claim reference and type, and the RPA registration and guarantee numbers are included in the first ‘initial input screen’, if you’re using Human Computer Interface. Commercial software can vary, but you should still be able to include this information.

Any registered recipe code as well as any relevant RPA licence details are inputted on the second screen. Details of Supplementary Declaration codes and ingredients have dedicated slots on the third of the initial input screens. You don’t need to claim separately for an export refund - HMRC will send the details you have entered above to the RPA for you. While you’re obliged to use CHIEF, paper declarations can be made if the system is temporarily offline. See export declarations and the National Export System.

You can find out about customs procedures for exporting goods subject to the CAP in Notice 800 on the HMRC website.

Sources of help and support for CAP traders

As an importer or exporter of CAP goods, you can turn to a range of bodies for help and further information.

The government organisation with primary responsibility for providing trade support is the RPA. The RPA is responsible for determining which goods need CAP import or export licences, controlling licence quotas, issuing licences, taking financial guarantees and paying refunds.

The RPA also helps traders with queries about CAP registration and licences. You can find out about the role of the RPA on its website or email the RPA enquiry team at enquiries@rpa.gsi.gov.uk.

Customs officers at HMRC manage and administer the import and export of goods when they enter or leave the UK. HMRC will:

accept your CAP import and export entries
validate the declaration details on the CHIEF computer system
authenticate electronic licences
collect CAP charges at importation
control goods physically, including arranging for goods to be examined or sampled

You can call HMRC VAT Helpline on 0845 010 9000.

The Department for Environment, Food and Rural Affairs (Defra) is responsible for UK agricultural policy. Defra also represents the interests of UK farmers and traders in agricultural produce within the European Community. The UK’s Plant Health Inspectorate, which issues trade licences for some fruit, vegetables and plants, is part of Defra’s Food and Environment Research Agency (Fera). You can find out about the Plant health information on the Food and Environment Research Agency (Fera) website.

Defra can provide valuable advice on licensing or health-related issues, and you’re strongly advised to get in touch with them before you make plans to import agricultural goods. You can find out about Defra and their latest news on the Defra website.