What Are Customs Relief Schemes and How Can They Save Businesses Money?

If your business regularly imports or exports goods, then you’ll know how much of an impact customs duties and import taxes can have on profit margins.

The good news is that there are a range of customs relief schemes that businesses can take advantage of in order to reduce or completely remove these charges depending on the situation. The bad news is that many businesses either don’t know that these schemes exist, or are worried that applying for them might be too complicated. The reality, however, is that these schemes aren’t as complex as they might look and taking a little additional time to understand how they work can save a business thousands of pounds every year.

We’ve explored some of the most common schemes, how they can save you money, and how to access these resources.

1. Returned Goods Relief (RGR)

If goods that originate in the UK are exported and then returned within three years, then as long as they haven’t been altered abroad, they can re-enter the UK without having to pay duty or VAT.

For example, if you exported goods to a trade show in a different country and then shipped the items back into the UK, they could enter duty-free under the Returned Goods Relief scheme. This helps to protect businesses by ensuring that they don’t pay tax more than once on goods that they own.

2. Temporary Admission Relief

On the subject of shipping goods for trade shows, Temporary Admission Relief allows companies to import into the UK without paying duty or VAT, as long as the goods are re-exported within a previously set timeline.

This can also cover goods like scientific instruments and testing or demo samples, enabling the company to avoid having to pay import duty on items that are only in the UK for a short period of time.

3. Inward Processing Relief (IPR)

Inward Processing Relief, otherwise known as IPR, allows businesses to import goods from outside the UK without having to pay customs duty or VAT, as long as these goods are then re-exported. These goods can be re-exported either in the same state or after they have been processed or assembled into something else.

For example, if a clothing company imports fabric from outside of the UK, cuts and stitches the fabric into clothing, and then sends the finished garments out to the US or Europe, they would pay no duty on the fabric as the products leave the UK.

4. Outward Processing Relief (OPR)

When goods are temporarily exported outside of the UK to be processed or repaired before being re-imported, Outward Processing Relief (OPR) applies. This means that when the repaired or processed items are returned to the UK, the company only pays duty on the cost of the repairs instead of on the total value of the item.

This cuts down on the costs of duty on repaired or modified goods, making international servicing much cheaper.

5. Customs Warehousing

A company importing from outside the UK has the option to store goods in a bonded warehouse with no duty or VAT needing to be paid until the goods are sent into the UK market. This means that only the goods released to the UK will be liable for duty and VAT, and goods that are later exported out to Europe are exempt.

6. End-Use Relief

Some goods qualify for either reduced or zero rates of duty if they are being imported for a specific, approved use. This includes things like aircraft parts, materials for shipbuilding, and a select range of raw materials used in manufacturing.

How Can You Access These Reliefs?

Most of these schemes require authorisation via HMRC and these applications will involve documentation covering how the goods will be used and a review of records. Because of this, the most important thing is to make sure that your paperwork is all correct and up to date, otherwise this can lead to backdated duty charges.