CUSTOMS INFORMATION PAPER (13)25

Inward Processing – Throughput period, Bills of Discharge and Compensatory Interest calculation

Who should read: /

All businesses using Inward Processing (IP) and agents/representatives who are employed by IP Authorisation holders

What is it about: / Updated guidance on IP requirements:Throughput period,Bills of Dischargeand Compensatory Interest
When effective: / Immediately
Extant until/ Expires / Until further notice

1. Introduction

This is one of a series of CIP papers being issued by the IP Policy team. They will cover subjects where there have been:

  • changes in IP policy;
  • where current IP policy has been found to have not been implemented correctly; and
  • where confirmation of existing IP policy has been sought from the EU Commission.

The contents of this and other CIPs issued by the IP Policy team will be incorporated into the next update of the IP Public Notices (221 and 221A) later this year.

Following a number of queries from traders and subsequent clarification from the EU Commission this CIPis designed to provide updated guidance and clarification ofthe following IP requirements:

  • Throughput periods(and storage);
  • Bills of Discharge (BoD); and
  • Compensatory Interest calculation.

2. Throughput periods

A) IP with a Simplified Authorisation - In the case of goods entered to IP with aSimplified Authorisation, unless you request a longer period on your import entry, a fixed throughput period of 6 months will be authorised. If this is insufficient time to process your goods, you should request an extension from the Supervising Office(National Import Reliefs Unit (NIRU)) before the expiry date of the throughput period. Requests for extensions should be made in writing and provide full details of the reasons for the request.

It should be noted that Inward Processing may not be used to store goods after processing is completed so extensions will not be granted for this reason (see paragraph 2D below for further information on storage).

B) IP full Authorisation holders - For all other types of IP authorisation the throughput period starts either from the date you import goods to IP or the date the goods were transferred to you. You need to specify on your IP application form the throughput period you require to meet your business needs. The time limits for the throughput period for IP are based on either the legislation whereby certain products are given defined time limits (for example IP Article 542) or on consideration of the period requested by the trader on their application.

We have been working within HMRC and with traders for some time to standardise practice on the allocation of throughput periods to ensure that we are adhering to the legal conditions of the operation of the Inward Processing procedure. The throughput period must be demonstrated in the request for IP authorisation by the submission of a detailed end to end flow chart explaining the full process with time periods etc so that this information can be assessed by officers considering the authorisation request. HMRC may then look at whether, for example, complex processes involving sampling and quality checks throughout can be regarded as part of the processing.

C) Usual Forms of Handling (UFH) - HMRC consider that applications concerning Usual Forms of Handling (UFH) are simple operations therefore any applications for UFHwill be given up to a maximum throughput period of three months.

D) Storage - Once processing is finalised the IPgoods should be re-exported as soon as possible.If you need to store goods before and/or after processing you should use thecustoms warehousing arrangements. A reasonable period of storage will be permitted if it can be demonstrated this is part of the 'process' but any period of storage cannot be longer than the time taken to process the goods.

3. Bills of Discharge (Forms C&E812 and C99)

IP traders are reminded that it is a requirement of IP to submit Bills of Discharge to the Supervising Office within 30 days of the end of the agreed throughput period. Failure to complywill lead to the suspended duties and Import VAT becoming due.

The recent European Court of Justice ruling (Case 262-10 Dohler Neuenkirchen Gmbh) ruled that the failure to supply a Bill of Discharge within the time limit incurs a customs debt under Article 204 (1) (a) of the Customs Code for ALL goods covered by the Bill of Discharge even if some of the goods had been correctly re-exported and evidence of re-export subsequently provided. CIP(13) 26 explains more about the European Court ruling.

You should ensure that you provide all the data required by law in the Bill of Discharge (as set out in Article 521(2) Customs Code Implementing Regulations 2454/93).

To make sure you are fully complying with the legal requirements you can use the Bill of Discharge forms available on our website. IPfull Authorisationholders should complete the C&E812 form and, for IP Simplified Authorisation holders, the new i-form C99 issued last year should be completed.

Full IP Authorisation holders are required to submit NIL return Bills of Discharge monthly or quarterly (as indicated in your authorisation).This can be done by printing the C&E812,completing minimum data and signing the Declaration page for submission to your Supervising Office.

Traders who prefer to submit a schedule with the required data should ensure that all the information required by law is submitted with a signed Declaration.

4. Where to submit Bills of Discharge

For IP with a Simplified Authorisation and Non-LBS (Large Business Service) authorised IP traders, Bills of Discharge should be sent to your respective Supervising Office (see Contacts Section below). For LBS traders, where to send your Bills of Discharge is detailed in your authorisation. As these forms are required to be signed and we do not at present have a facility to accept an electronic signature, you should send a hard copy of the Bill of Discharge or fax it to your Supervising Office unless instructed otherwise.

5. Compensatory Interest - calculation for goods released to free circulation

Following a number of queries regarding the calculation period for compensatory interest we have clarified with the Commission that in the following scenarios:

(i) Goods entered to IP suspension, then entered to a customs warehouse and then released to free circulation; and

(ii)Goods entered to IP suspension, then entered to transit and then released to free circulation;

the compensatory interest period should run from the date of import until the goods are released to free circulation in accordance with Article 519(3) of the Customs Code Implementing Regulations which states that "Interest shall be applied on a monthly basis, starting with the first day of the month following the month in which the import goods for which a customs debt is incurred were first entered for the arrangements. The period shall close on the last day of the month in which the customs debt was incurred.”

6. Contacts

General queries on Customs Procedures should be directed to the Excise & Customs Helpline on Tel 0845 010 9000.

Questions can also be submitted electronically by email using the iform at the following link:

Customs General Enquiry Form.

If you have a specific query about your Inward Processing Authorisation please contact your Supervising Office:

For IP with a Simplified Authorisation this is National Import Reliefs Unit,Abbey House, Head St, Enniskillen, Northern Ireland, BT74 7JL. E-mail - (or visit the NIRU Website for further details).

For IP authorised LBS Traders this will be the contact named in your authorisation.

For Non-LBS authorised traders this is CITEX – Authorisations and Returns Team, 2nd floor East, HMRC, Fitz Roy House, Castle Meadow Road, Nottingham, NG2 1BD.

Issued on the 22 April 2013by the JCCC SecretaryHMRC, Excise, Customs Stamps & Money Directorate.

To find out what you can expect from us and what we expect from you go to and have a look at YourCharter