Duty Suspense and Relief
There is a range of facilities provided by customs to enable duties and taxes on goods to be relieved or suspended for certain periods. This would apply, for example, to goods being imported or exported for repair. It also applies to goods being stored for a certain period of time until use.
European legislation lays out the procedures and authorisations involved in these procedures which will be administered by Revenue in Ireland.
Inward and Outward Processing Relief
Under outward processing relief, the goods can be sent to non-EU countries for processing with total or partial relief from duty and taxes. Exporters must be authorised to use the scheme and must be able to demonstrate the goods were exported as part of a process to produce or incorporate them into another product.
The inward processing relief scheme is similar. It allows importers to receive goods from any EU country for incorporation into a process with total or partial relief from duty and taxes, provided they are re-exported.
There are restrictions on the type of goods that are eligible. On certain sensitive goods, an economic test may be required.
“Drawback” applies to goods which have been previously imported with all duties paid which are subsequently re-exported in the same state following the process. The duties are reclaimed.
Where goods have been exported from the EU and returned within three years certain reliefs can be available.
Processing under Customs Control
Processing under Customs Control (PCC) permits the import of raw materials with customs duty, VAT, agricultural levies and other CAP charges suspended. The duties and taxes apply to the processed goods only when they are put into free circulation rather than when imported.
Businesses established in the EU can use PCC provided they obtain authorisation from HMRC before doing so. The finished goods must be released into free circulation within a reasonable timescale. This is the “throughput” period.
If goods are being processed for re-export from the EU, inward processing relief may be used instead of PCC. The appropriate authorisation for the particular business will depend on the nature of goods that are being imported.
Raw materials can be entered into PCC in a number of ways. It is possible to enter materials into PCC at import using the Single Administrative Document (SAD). They can also be entered using the Custom Freight Simplified procedures (CFS). If materials are being entered for inward processing relief, the customs procedure code must be quoted on the SAD.
Detailed records are required where PCC is authorised. The commercial documentation must clearly show the goods that are being imported, the process being carried out, what the products are and how the products and unprocessed goods are disposed of.
Paperwork must be kept for four years after the authorisation expires. The returns and frequency returns under PCC will be specified in the authorisation. Goods that have been imported under PCC can be transferred to another authorised business for work to be done on behalf of the importer. The types of permitted transfer will be dealt with under the initial authorisation to use PCC.
PCC is discharged when the processed goods enter into free circulation and the relevant duty and import VAT are paid. The entry of PCC goods into free circulation, moving of goods into other customs procedures and re-exporting can be dealt with by way of entering them on the Single Administrative Document, quoting the appropriate custom procedure code.
It is necessary to apply to HMRC for prior authorisation to re-export goods. Moving into other customs processes may also require prior authorisation unless an integrated authorisation is held.
The duty paid when finished PCC goods are released is the duty payable on the finished product manufactured. This must be paid on the day they are released from the free circulation. The tariff will specify the relevant rate of duty.
Temporary Importation Relief
Temporary importation relief applies to goods such as samples, professional equipment, items for auctions, exhibitions and demonstrations, provided the goods are not altered while they are in the EU.
Eligibility for this relief is based on the type of goods concerned and their use before being re-exported. If goods are imported for process or repair, an alternative relief may be available such as inward processing relief. Goods that are temporarily imported from specific countries may be eligible for relief using an ATA carnet instead of TI. The ATA carnet replaces normal customs documents that otherwise would be required at import and export.
This relief covers duty and import VAT. If goods do not fall into the specified categories it may still be possible to qualify for partial relief subject to certain conditions and provided goods are ultimately re-exported outside the EU. The relief will then be applied at the point of entry.
It is necessary to be authorised in order to claim the relief under TI. Security and guarantee will be required. There are several types of authorisation. They will have different suitabilities for different types of business.
Specific procedures must be followed when re-exporting goods imported under temporary importation. The goods must be pre-entered before export unless a simplified procedure is being used in which case a pre-shipment advice must be used. In the case of goods leaving the European Union, the SAD Re-Export Declaration should be completed. For postal exports, it is necessary to mark the packages TI Goods and set out the TI and VAT number.
When goods are re-exported via another EU member state it is necessary to ensure that three copies of the SAD travel documents stay with the consignment. If goods are subject to import licence it may be necessary to get approval from BERR import licensing branch.
If the importation is for a major event such as for the purpose of a major overhaul re-fitting or refurbishment, inward processing relief is probably more appropriate than temporary importation relief.
End Duty Relief
“End duty relief” from import duty is available on the importation of certain kinds of goods into the European Union, that are to be processed to put to a specific use. In order for the relief to be availab,le it is necessary to be authorised by HMRC, that the goods are eligible for end use relief and that the goods are put to a prescribed use within a certain time.
End use relief means that no rate or reduced rate of import duty or no import duty is paid. It does not affect other taxes such as VAT, excise duty or anti-dumping duty.
The integrated tariff specifies what goods quality for end duty relief. Footnotes on the tariff will specify.
It is necessary to declare the goods at the point of information using a Single Administrative Document. If it is necessary to claim the relief at the time the Declaration is made with a description of the goods, the preference code, customer procedure code and the end use authorisation number.
Temporary storage is a status of goods under the EU Customs Legislation imported from outside the EU, until the time they are assigned to a customs approved treatment. The treatment could include placing the goods under a particular customs free procedure, entry into a warehouse, re-exportation, destruction or abandonment.
Goods imported into the EU must be presented to Customs within 3 hours of their arrival. This must be followed by a Summary Declaration within 24 hours. Temporary storage may permit the delay of payment of duty and taxes and imported goods until they are assigned to a customs approved treatment or use. This may allow time to obtain the relevant import licence or other documentation.
Certain traders can have their premises approved as temporary storage facilities. They include freight forwarders, customs agents, warehouse keepers and transport companies. Goods in temporary storage must be cleared through a customs approved treatment within 45 days of the date of Summary Declaration, in the case of goods brought in by sea and 20 days in the case of goods brought in by air.
Temporary storage facilities must be approved by HMRC. They must meet national health and safety at work legislation requirement, be suitable for storing loading and examining goods and must be physically secure. Proper stock records must be kept.
There are a number types of temporary storage facilities. They may be situate in or outside a sea or airport. The principal types are as follows:-
Transit shed, usually within the area of an approved port or airport but outside customs area.
- Remote transit shed’ in the boundaries of an appointed area or an improved airport or port;
- Enhanced remote transport shed; situate outside the area of the port or airport;
- Inland clearance depot;
- Inland rail depot.
Certain goods cannot be moved to a temporary storage facility until they have undergone a physical and documental check.
Authorised Economic Operator
The authorised economic operator status authorises import and export agents to benefit from favourable treatment in relation to customs control and other simplifications. AEO status exporters must meet certain criteria including maintenance records of compliance, systems of management, financial solvency, security and safety safeguards.
The status may offer certain benefits including simplified proceedings, security and safety and facilitation from customs control and customs simplification. There are different types of certification of AEOs which offer different levels of benefits.
If AEOs are approved for any of the following purposes, they are not subject to further scrutiny under the following procedure:
- simplified declaration
- local clearance procedure
- outward processing procedure
- transit simplification
Customs Freight Simplified Procedure
Customs Freight Simplified Procedure (CFSP) is an electronic customs declaration for speeding up the importation of goods. When CFSP goods arrive at a frontier from outside the EU, an initial declaration known as a Simplified Frontier Declaration is submitted by the trader to allow the release of the goods. Subsequently, details of the consignment are sent via a Supplementary Declaration which is sent to HMRC within a set time. It is possible to use CFSP alongside other favourable custom procedures.
In order to operate CFSP, the business or trader must be authorised by HMRC. In order to qualify for use, the business or the agent must have access to the electronic recording system, have a unique trading reference number, have a good record of compliance and be able to use its duty deferment facility HMRC will inspect books, records and procedures to verify that it is appropriate for the procedures.
Under CFSP, a duty deferment account is operated through HMRC. Traders and representatives must pay by the duty deferment account.
HMRC treat goods imported under CFSP in the same way as goods entered under the normal procedures. On arrival in the EU, HMRC may check the goods for any smuggling, animal and plant health standards and other controls.
CFSP Declaration Procedure
There are two ways that agents can use the CFSP procedure, the declaration procedure and local customs clearance. Once goods reach the frontier, they may be released into free circulation or into another customs process, inward processing relief, processing under customs control, inward or outward processing relief, a free zone or customs warehousing.
The CFSP is carried out in two stages.
Stage 1 – trader provides minimum details of the consignment to the frontier using a simplified frontier declaration (SFD). This creates a basis for submitting a further more detailed supplementary declaration.
Stage 2 – trader submits the supplementary declaration of import before the end of the fourth working day of the month following the date of acceptance.
Controlled goods are subject to additional procedures.
CFSP Local Clearance Procedure
Under this procedure, the Community Transit or National Transit procedures may be used to move the goods from the frontier to a designated inland premises. It is necessary to have an additional authorisation for transit procedures as well as authorisation for CFSP. The trader must be authorised and must hold a comprehensive guarantee or guarantee waiver and an authorised consignee. The transit procedure is discharged on arrival at inland premises, after which goods may stay in temporary storage for up to 20 days.
Traders can use LSP to release goods to customs procedure in five stages:
Stage one: Trader provides minimum details of the consignment to CHIEF at the frontier.
Stage two: Trader uses Community or National Transit procedure to move the goods to designated inland premises.
Stage three: Trader uses local clearance to enter goods to a customs procedure.
Stage four: Traders submit a supplemental declaration before the end of the fourth working day of the following month.
Stage five: Unless goods are re-entered traders submit the final supplementary declaration before the end of the fourth day of the working month.
To allow import goods at the frontier, it is necessary to submit a clear SFD via customs handling and import and export freight system (CHIEF). The Supplemental Declaration must be submitted by the prescribed deadline. This is usually the fourth working day of the month following the date of acceptance of the SFD.
The effect of CFSP is that duty on imports becomes due later in the process. The SFD and SD can be submitted by the importer directly or by an agent. SD can be submitted electronically and the amount of duty and taxes are notified by a Customs response message.
Many products imported into the UK from other EU countries are eligible to use the Custom Freight Simplified Procedure. Certain goods are not eligible. These include goods governed by the Common Agricultural Policy, licensed goods, goods controlled under certain simplified procedures e.g. custom warehousing, inward processing, outward processing relief and goods moving through the UK under community transit.