Last reviewed 5 May 2016
After this week’s implementation of the Union Customs Code, Sandra Strong clarifies some points which have been causing confusion.
A number of things have come to light in the first few days since the implementation of the Union Customs Code (UCC), which show that there is some confusion especially in the area of Inward Processing Relief (IPR). HMRC issued a letter at the end of April 2016 to traders that hold Inward Processing (IP) authorisation which has added to the confusion as it refers to a single Article of the UCC for valuing for entry into free circulation goods after 1 May 2016 if they were originally entered to IP. There have also been some statements made and advice given by some freight forwarders that importers must now have a financial guarantee in place or they cannot process an import to IP and that the IP import Customs Procedure Code (CPC) has changed.
To clarify the situation:
The standard import CPC is still valid for goods entered to IP when the intention is to process the goods and export them from the EU to a third country after the process. This is CPC 51-00-000.
The new CPC 51-00-F44 is to be used if you previously imported goods to Processing under Customs Control (PCC). PCC no longer exists as a separate procedure but has been merged with IP. PCC was used when the processed goods were predominantly going to remain in the UK/EU. Though PCC traders can continue to use their PCC authorisation number, imports must be made against this new CPC. This also affects the value calculations when releasing the goods to free circulation.
Traders granted new IP authorisations issued under UCC conditions can, if approved to do so, discharge customs duty liability by either exporting the processed goods or releasing them to free circulation under the F44 code. This will cover not only traders using PCC, but also companies using end-use duty relief procedures, meaning the finished item is often zero-rated for customs duty.
Using Simplified IP applied for at the time of arrival (now known as Authorisation by Customs Declaration) should continue to use 51-00-001 or 51-00-003 at import (if IP is being used to suspend VAT only). See Financial Guarantees below.
If goods imported to IP have to be released to free circulation then you must pay duty on the original value of the goods as declared at import (bearing in mind this must be an accurate value applicable to a true sales/insurance value for the goods). This is no change from previous procedures but comes under Article 85 of the UCC.
If you previously imported goods to PCC or are importing under 51-00-F44 from the 1 May 2016 then the value to be declared when bringing the goods to free circulation in the EU is based on Article 86(3) of the UCC. This means you will be discharging your duty liability by declaring the goods to free circulation under the value of the manufactured item (a higher price obviously) but at the duty rate of the manufactured item. This is only a benefit if the finished product duty rate is zero or comes under a reduced or zero duty end-use rate.
Financial Guarantees will become applicable once a trader has been re-authorised under UCC conditions or if he or she is using Authorisation by Customs Declaration (simplified procedure). In the meantime, companies should instruct clearing agents to ensure the correct document codes are quoted on the import entry to declare that a financial guarantee is not applicable.
In order to use Authorisations by Customs Declaration, a guarantee for customs duty and import VAT will be required. These can be provided in the following ways:
General Guarantee Accounts (method of payments (MOPs) S, T, U or V)
Deferment Deposits (MOP Q)
FAS (MOP P).
Anyone that wishes to use either of the first two options but does not already hold the appropriate account will need to apply to the addresses set out below, but please note that the Deferment option will now also require a Customs Comprehensive Guarantee (CCG) using a CCG1 form.
Where a guarantee is not required, the following codes are needed on the import declaration:
9AID JP NO SECURITY REQD
9AIV JP NO SECURITY REQD.
No tax lines are required in this case.
Where a guarantee is required, the following codes would be needed:
AI Statement GRNTR plus
9AID UP Guarantee number
9AIV UP Guarantee number.
The following tax lines would be needed in this case:
A00 F P (or Q)
B00 S P (or Q).
Change to IP when Anti-Dumping Duty (ADD) involved
Any trader authorised for IP who, prior to 1 May 2016, also suspended ADD must not continue to use IP but must reapply. The suspension of ADDs now requires a full review prior to being granted an IP authorisation. The new application form is available on the GOV.UK website (Form SP3).