Inward Processing enables businesses to reduce customs duty charges when importing and exporting goods before putting them to a qualifying use, namely:

Exportation for processed goods, primarily to export out of the UK.

Use the import to make something that would attract a lower customs duty charge rate and if imported (also known as Tariff Inversion). This can help businesses who specialise in importation and exportation of goods save money on import VAT with HMRC.

Inward Processing Requirements

Using Inward Processing requires your business to take on additional compliance obligations, in order to adhere to HMRC regulation including:

  • Ensuring the goods are put to the above qualifying use within time limits set by customs in order to avoid additional charges. The greater the level of Processing, the longer HMRC grant for you to put goods to a qualifying use. Businesses commonly use Inward Processing in conjunction with Customs Warehousing to create a Virtual Free Port which can greatly assist with the lowering of import VAT, customs duty and other affiliated HMRC charges.

  • Submitting periodic returns (known as Bills of Discharge) of goods imported and put to the qualifying use.

  • Releasing non-qualifying import or export goods and paying the necessary duty on them.

  • Ensuring the goods are imported and, if relevant, exported correctly, quoting the necessary HMRC and customs duty authorisation details and specific customs procedure codes.

  • Maintaining audit trails and supporting documentation (both customs and commercial) to be HMRC audit ready, helping to simplify most stages of your inward processing and assisting in the avoidance of any surprise charges.  

Unfortunately, failure to meet all the requirements can result in loss of ongoing HMRC customs duty relief and claw-back of savings made to date leading to higher charges paid during the importation and exportation process. 

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Inward Processing

Application Process

Inward Processing requires prior authorisation from HMRC and your business taking on additional compliance obligations. The application process typically takes 3 months, but in exceptional circumstances, can be applied with retrospective effect. It should include:

  • Review your current operations to ensure that your business is eligible to access inward processing:
    • Ensuring you meet the underlying conditions of Inward Processing, including financial solvency, being established in the UK, having appropriate systems, having a good tax compliance history, no prior issues flagged by HMRC, etc.

    • All master data (mss) (customs classifications, origins, and customs values are correct), negating the risk of Garbage in Garbage out with the new system. 

    • The business case still makes sense if changes in your master data impact your customs duty costs and, therefore, any savings when paying customs charges.

  • Fixing any compliance issues from the inward processing review.

  • Determining the most appropriate Inward Processing configuration for your business, including how you deal with scrap, the use of simplifications such as First In First Out and Equivalence, which maximise any customs charge and VAT savings and reduce compliance complexity. 

  • Complete the necessary HMRC and third-party affiliated application forms and questionnaires.

  • Build the Inward Processing systems, mapping data-flows, interfacing the commercial and customs systems, etc.

  • Draft the necessary document landscape, including audit trails, control of master data, transaction flows, working instructions bolstering your validity within the inward processing field. 

  • Managing HMRC involvement through the process, addressing initial questions on the application, addressing points coming out of their application audit, and reviewing any authorisation to ensure it conforms with HMRC regulation and what you applied for.

  • Training staff to operate the Inward Processing and ancillary compliance obligations coming out of the authorisation, including spotting errors, managing business and regulatory changes, etc.

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How We Can Help

Barbourne Brook has helped many clients obtain HMRC & Government permission to carry out Inward Processing. Our assistance speeds up the application process by helping you avoid common mistakes that other businesses may be making. The savings from tapping into our knowledge would lead to a streamlined application process leading to savings on charges that usually cover any incurred costs.

We have tried and tested tools, methods, and contacts that help minimise any disruption to you and your business from the application and inward processing implementation process.

Our wealth of experience and deep knowledge of customs regulations and best practices ensure you end up with the best inward processing solution for your business that maximises savings and minimises compliance costs and compliance risks.

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Inward Processing

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