Inward Processing Relief (IPR) is a customs regime which allows companies to import goods to the UK for processing. The “finished” goods must be disposed of in an approved manner, e.g. by re-export or by deposit in a customs warehouse.
IPR allows both customs duty and import VAT relief for the goods (raw materials or semi-manufactured goods) imported for processing into manufactured products for re-exportation. IPR is also possible for goods being sent to the UK for repair or replacement, whether or not under warranty or as part of a service contract. Customs duty due at import is suspended contingent on the disposal (usually by re-export) of the finished products. In some circumstances the processed goods may not be the imported goods but “equivalent” goods. Indeed it is possible, if authorised by HMRC, to export the equivalent finished goods before the manufacturing materials are imported under IPR.
Operating IPR usually requires prior authorisation from HMRC (unless the importation qualifies under the simplified IPR regime). The application process can be lengthy and complicated. If authorised, the operator must implement additional compliance processes. Before applying for IPR, companies should consider whether the benefit justifies the time and cost of applying for and administering this regime.
All companies which import goods for production and sale, especially if they have significant markets outside the UK, should consider whether IPR can help them reduce unnecessary customs duty costs.
4 Eyes Ltd has helped many IPR operators and applicants to maximise savings using IPR while minimising the administrative burden. We have assisted dozens of companies with IPR scoping and benefit analysis, applications and administration. Reviews of operating IPR schemes often identify significant new opportunities for savings. We also help to resolve problems discovered e.g. in course of HMRC audits of IPR operators.
If you are considering applying for IPR approval, or have any questions about IPR, we welcome your call.