Guidance

Apply to delay or pay less duty on goods you import to process or repair

Use inward processing to delay or reduce import duties or VAT on goods that you process or repair.

From:
HM Revenue & Customs
Published
21 January 2020
Last updated
14 July 2023 — See all updates

If you’re authorised to use inward processing to process or repair your goods, you will not need to pay Customs Duty and import VAT on goods that you import from outside the UK and then re-export from the UK.

If you keep your goods in the UK, you can pay a reduced amount of Customs Duty and import VAT if the duty rate for the processed goods is lower than the imported goods.

You can also delay paying excise duty on goods you process, but you’ll have to pay the duty if you release the goods into free circulation.

Who can apply

To apply for inward processing, you’ll need:

If you’re not established in the UK:

  • we’ll consider an application to use inward processing for non-commercial imports
  • you’ll need to be fully authorised

Before you apply

You’ll need to gather this information together before you apply:

  • your goods’ commodity code (this will be at least 4 digits, or 8 digits for equivalence goods)
  • how you’ll value your goods if you release them to free circulation
  • the number of goods you’re going to process
  • the process you’re going to carry out
  • how long it’ll take you to process the goods
  • the number of products you’ll make
  • the rate of yield
  • what records you will keep and where you will keep them
  • where you’ll enter the goods to inward processing
  • where you intend to discharge them from inward processing
  • names and addresses of anyone else that will be processing or repairing goods, for example sub-contractors

How you’ll value your goods if you release them to free circulation

Any duty you pay will be based on either the value of the:

  • goods at import
  • final product

You’ll have to tell us when you apply for authorisation how you’ll be valuing your goods if you release them to free circulation. Normally, the choice will be yours but sometimes we will have to tell you which method to use. This will depend on:

  • the goods you import
  • what process you intend to carry out
  • the economic impact of your authorisation on the UK

The number of goods you’re going to process

You will need to calculate the number of goods you want to import over the period of your authorisation. This will be either up to:

  • 3 years for sensitive goods
  • 5 years

Sensitive goods are those that will have the biggest economic impact on the UK.

The process you’re going to carry out

You will need to tell us what you are going to do with the goods you import. This is done by telling us which economic code you will be using.

How long it will take you to process the goods

You’ll need to work out how long it will take you to process the goods you import.

You should provide us with a reasonable average for each of the processes you carry out.

The number of products you’ll make

The products that you intend to make are known as the ‘processed products’. There are 2 types of processed products:

  • main processed products are the goods you’re applying to make
  • secondary processed products are by-products of the processing operation, they’re not production losses, waste or scrap

You must calculate the number of main and secondary processed products you’ll make. You should do this by using the ‘rate of yield’.

Rate of yield

You’ll need to tell us your expected ‘rate of yield’. This is the number of processed products made from the quantity of goods you enter to inward processing.

For example, if you simply repair and return goods, the rate of yield will be 1:1.

If you import 300 metres of cloth to produce 100 identical items of clothing, the rate of yield will be 3:1.

If you’re running more than one processing task, each will have its own rate of yield.

Examining the economic conditions of your authorisation

Depending on the goods you import and, in some instances, the method you choose for calculating any duty that is due, your application or authorisation may be examined to make sure it does not disadvantage UK producers.

If your application is considered to have an impact on UK producers, the application may have to be amended or you may have to withdraw it.

If you already have an authorisation and it is decided that it has an impact on the UK, it may have to be amended or cancelled.

Relief for production accessories

You can also use inward processing to get relief on goods that help in the processing of your goods but are not found in your final products. You can get relief even if they’re totally or partially used up. For example:

  • chemical reaction accelerators, retarders or arresters
  • goods you need to protect products during processing
  • goods you need to create the right environment for the performance of processing operations

You cannot get relief on:

  • fuels or energy sources other than those you need for testing products you make or for detecting faults in goods you import for repair
  • lubricants other than those you need for the testing of products you make or their adjustment or withdrawal

How to apply

There are 4 types of authorisation you can get to use inward processing:

  • full
  • retrospective
  • by declaration
  • authorisations covering Northern Ireland and the EU

You should apply for authorisation at least one month before you intend to import your goods except when you apply for authorisation in your declaration. This will give us time to process your application. If we need longer we’ll contact you with a new date.

Full authorisation

A full authorisation allows you to use:

  • inward processing regularly
  • simplified declarations to import or export your goods
  • inward processing if you import non-commercial goods and you’re not established in the UK

You should apply at least one month before you start importing as we need this time to process your application. If we need longer, we’ll contact you with a new date.

To apply online for authorisation, you need to have a Government Gateway user ID and password. If you do not have a user ID, you can create one the first time you apply.

If you cannot do this online, you can use the inward processing print and post form.

Retrospective authorisation

You can ask for an authorisation after you’ve imported your goods, even if you’ve already exported them. We’ll only authorise you where we’ve not given you a retrospective authorisation in the previous 3 years.

You’ll need to show us records to prove that:

  • the goods are eligible
  • you have a business need
  • you’ve followed the inward processing procedure properly
  • there are reasonable grounds that stopped you from getting prior authorisation — a lack of knowledge alone does not qualify as reasonable grounds

You’ll also need to send us a:

  • letter saying why you need this type of authorisation
  • list of imports you want to include in the retrospective period

The maximum period for a retrospective authorisation is 12 months before the date you apply on. Where the goods are sensitive, the maximum period is 3 months.

If you’re asking to retrospectively renew an expired authorisation, a retrospective authorisation can be backdated to the date the previous authorisation expired. If we grant the authorisation, you’ll have to amend your declarations and update your records.

To apply online for authorisation, you need to have a Government Gateway user ID and password. If you do not have a user ID, you can create one the first time you apply.

If you cannot do this online, you can use the inward processing print and post form.

Authorisation by declaration

You can apply for authorisation in your import declaration at the border.

You can use do this up to 3 times in a rolling year for goods valued up to £500,000 for each import.

You cannot use it if any of the following apply:

  • you’re using simplified customs declarations
  • if you’re asking for a retrospective or backdated authorisation
  • if your goods are subject to anti-dumping duty
  • if you’re using economic codes 5, 6, 7, 8 or 12
  • you’re importing and processing:
    • controlled goods like arms, ammunition or chemicals that will be made into drugs
    • works of art, collector’s pieces and antiques
    • excise goods
    • meat for airline meals
    • catalysts, agents or items that help to manufacture or process goods for export

You cannot apply for this type of authorisation if you have a Rural Payments Agency certificate that covers you for importing a certain amount of goods. If you want to import goods with a certificate, you’ll need a full authorisation.

Authorisations covering Northern Ireland and the EU

If you carry out work on your goods over sites in both Northern Ireland and the EU, you can get a single authorisation rather than having one for each site.

You need to apply for this type of authorisation by emailing admin.uum.cdms@hmrc.gov.uk.

We’ll need your:

  • name
  • contact email address
  • address of your Northern Ireland operation
  • EORI number starting XI

We’ll reply within 5 days and provide a link to the EU Customs Trader Portal where you can access the application form.

If your application is successful then, whenever you use your inward processing or outward processing authorisation, you will need to submit a standardised exchange of information using the EU Customs Trader Portal.

After you apply

When we authorise you, you’ll get a letter that sets out the authorisation conditions.

Conditions include things like:

  • paying Customs Duty and other charges
  • keeping detailed records

You should write to the address on your letter if you want your authorisation to be:

  • amended
  • renewed
  • cancelled

Find out how to use certain goods with inward processing.

If your information changes after you’ve applied

We may need to contact you after you apply. This could be to request additional information or to organise a site visit.

If any of your contact details change (for example, your address or telephone number) you must let us know by email or by writing to the address on the acknowledgement letter we sent you.

We may delay or refuse your application if you do not provide all the information we need to complete it.

You should also write to us if there has been a change to your business which may affect your authorisation, such as:

  • changing your trading name
  • being taken over by another business

Other ways to pay less duty or import VAT

Find out more information about other ways to:

Updates to this page

Published 21 January 2020
Last updated 14 July 2023 + show all updates

  1. Updated the section 'Before you apply' to clarify that a commodity code for goods will be at least 4 digits, or 8 digits for equivalence goods.

  2. Information about the reasonable grounds for getting a retrospective authorisation and how you should amend your declarations and update your records has been added.

  3. Information about what to do if your contact details change after you've applied has been added.

  4. Information about not being able to make import declarations on the Customs Handling of Import and Export Freight (CHIEF) system from 1 October 2022 has been added.

  5. Updated the links to the inward processing print and post form which you should use when applying for full authorisation and retrospective authorisation.

  6. This page has been updated because the Brexit transition period has ended.

  7. This page has been updated with information about multi state authorisations in Northern Ireland from 1 January 2021.

  8. An online form has been added.

  9. First published.

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