Processing under Customs Control (PCC) is a duty relief arrangement that allows for materials and parts to be imported into the European Community where they are then to be "processed" into a finished or semi-finished product. The parts and materials are declared under the same commodity code as the finished product itself, thereby potentially saving money on Customs duty, agricultural levies and other CAP charges when the goods are declared to free circulation.

Why would I need PCC?

Under the Customs Tariff of the European Union, imported goods are classified under a specific code of which there are approximately 16,000. Each code is subject to a different import levy ranging from 0-217%.

The Customs Tariff is organised is such a way that in the majority of cases, imported goods are subject to higher duty than of imported raw materials. However, there are some cases when processed or finished products attract a lower rate of duty than the goods from which they are made. This could be detrimental to EU manufacturers/processors and therefore PCC exists to encourage processing in the Community by allowing certain raw materials or components to be imported under duty suspension arrangements. After processing, the finished products may be declared to free circulation at the lower rate that applies to them rather than at the rate that applies to raw materials. So in the example below, raw material is imported into the EU at a duty rate of 10%, however the duty is suspended and the goods are then processed and then the goods are released as part of the finished product and a duty rate of 1% is paid instead.

Example of Typical PCC Process

Who can use PCC?

To be eligible to use PCC you must be:

• A natural or legal person established
in the EC.

• The person carrying out the processing
or arranging for it to be carried out.

• Authorised by HMRC to operate the
procedure.

What is the process for applying for PCC?

First of all, it is necessary to apply to HM Revenue and Customs for an authorisation for PCC. There are four types of authorisation available:

(1) Simplified (for occasional imports to PCC with processing taking place in the UK only).
(2) UK Authorisation (Regular importing and processing taking place in the UK only).
(3) Single "Community" Authorisation (Processing operations that will take place in more than one EU Member State).
(4) Integrated Authorisation (Where PCC is used in conjunction with other customs procedures, for example Inward Processing Relief (IPR)).

Along with the application form (the exact form depends on the type of authorisation you are applying for) it is necessary to provide HMRC with:

• Evidence of the economic reason for needing to use imported goods in the process and;
• Evidence that authorisation will lead to the creation or maintenance of processing activity within the EC.

Unlike IPR, the economic test conditions are rigorously applied. If the benefit is above 50,000 euro then the test must be carried out by BIS (in the UK). If the application involves agricultural produce then the application may need to be sent to the EU Commission.

HMRC is obliged to give a decision within 30 days of receiving all of the necessary documentation. These deadlines are longer in cases where the economic test needs to be looked at by the Commission.

PCC is usually authorised for a period of 3 years, at the end of the authorisation you are obliged to re-apply to seek a renewal for a further period of up to 3 years.

What must I do post-authorisation?

If HMRC agrees to authorise you for PCC, you MUST keep records of all goods that you have imported for processing under PCC. These documents must clearly show:

• The type of goods imported.
• The processes which are carried out.
• What the products are and;
• How you dispose of them or any unprocessed goods.

There must be a clear audit trail that HMRC can follow when they audit your business or you may be deemed to not be complying with your PCC authorisation terms and may risk losing the authorisation altogether.

Difficulties may arise if you dual source some items and common stock these with the imported goods.

How can International Trade Solutions help you?

International Trade Solutions has in-depth and expert experience of applying for authorisation of PCC, implementing and advising about the implementation of PCC systems as well as ongoing support for the continued compliance with all of the requirements of PCC.

For a free first consultation please contact us either by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or alternatively give us a call on (01905 619229).