Tribunal case published: Inward Processing

What happened?

The First Tier Tribunal (FTT) published a customs procedure decision on 24 October 2017.


The case covered the obligations of a business using Inward Processing (IP).

What is Inward Processing (IP)?

An IP holder may import certain goods with the duties and taxes suspended.  The importer must ‘process’ those goods as per the approval.  Approvals may cover processing such as repair or manufacturing.  The business must discharge the liability within an approved time limit.  The liability can be discharged in a number of ways – the most common is to export the processed goods – but the business might move the goods to another procedure or release them to ‘free-circulation’ by paying the duties and taxes.

What was the FTT case about?

It concerned a dispute regarding errors identified by HMRC.  HMRC issued a demand for underpaid duty and VAT and imposed a penalty.  The court considered whether the errors and amounts identified were fair.  HMRC said that the importer made errors in certain fields of the export declaration, which in turn – they argued – meant that HMRC did not have adequate supervision of the goods under the procedure.  The court disagreed with some of HMRC’s assessment and reduced the demand accordingly.

What does it mean to me?

IP can be extremely useful for business to reduce the costs associated with import.  In fact, with Brexit on the horizon, it may become even more useful, because it can replicate some of the benefits of the EU single market.  Businesses that trade with the EU may soon find that they must make customs declarations and pay duties and taxes.  If the operations are eligible, it may be possible to mitigate those costs using IP and/or another procedure.  For more information, please see – Preparing for Brexit: Customs 101

However, the conditions associated with IP are very stringent, and the administrative requirements are complex.  This case is one example of many where adherence to the strict conditions of an IP authorisation were examined.  IP users must manage their operations with competence and care.

Where can I find more information?

The full text of the case can be found by following this link

You can also contact us for more information about whether IP or another procedure might be useful for your business.  We also offer support in terms of managing your IP operation.

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