Inward Processing Relief

IPR gives duty relief and VAT suspension on goods imported for processing from outside the EC if the goods, or products made from the imported goods, are subsequently exported outside the EC. Though there are many pre-approved processes the Customs Authorities do have to ensure that allowing goods to be imported without the normal payment of duty and VAT does not harm the essential interests of Community producers of similar goods. As the name implies, IPR is dependent on a process taking place to the goods, but this can be as simple as the repacking or sorting goods to the most complex and sophisticated manufacturing process. The underlying concept is to increase EC competitiveness in world trade.

ADVANCED PREPARATION

Before deciding to use IPR you need to assess the following:

·        Countries involved

·        Import product description(s) including commodity code numbers and duty rate payable

·        Process to be undertaken, eg manufacturing, repair, etc

·        Commodity code of the “compensating product”, ie the goods to be exported or disposed of after the process

·        Type of Disposal – re-export, transfer to another UK trader, transfer to another EC trader, scrap, wastage, civil aircraft end-use, etc

·        If goods are to be re-exported know what value will be involved. Re-export generally applies to shipments outside the EC so remember not to immediately look at UK or EC exports.

·        Process and procedures for tracking and tracing goods through your internal system to the export/disposal

·        Duty saving potential

·        Internal control – who is responsible, who will do the administration.

Knowing the correct tariff classification codes (Commodity codes) of both your import and products to be disposed/exported is essential. The use of the correct commodity codes will clearly identify the goods for Customer purposes. For IPR purposes the commodity code is called the Combined Nomenclature or CN – this refers to the first 8-digits of the EC commodity code which is needed for EC trade statistics and export declarations. You do not need to report the full 10-digits of a commodity code for IPR purposes. This code number is important because it corresponds directly to the rate of import duty payable and points to any import regulations. When you are a specifically approved IPR trader you must ensure that all import and export entries are made against the authorised commodity codes.

 

Reproduced 24th January 2013 by Sandra Strong FIEX (CITA) Managing Partner Strong & Herd LLP

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