The end of Inward Processing relief (drawback) using a simplified authorisation

27 October 2009

The Modernised Customs Code (MCC) had as one of its main goals the streamlining and simplification of customs procedures. It is anticipated that the MCC will come into force in June 2013 as there is still some wrangling over the Implementing Regulations as well as the need for a transition period to accommodate the changes. However, in preparation for this change, HMRC intends to abolish Inward Processing Relief (drawback) using a simplified authorisation from 1 April 2010.

What are the reasons for withdrawing this procedure?

According to HM Revenue & Customs, the number of businesses using this particular procedure has decreased to a level where the maintenance, control and supervision of the procedure is now disproportionate to the trade facilitation that the scheme provides. However, it will still be possible to enter goods to IPR drawback using a pre-approved authorisation until the drawback procedures are withdrawn with the implementation of the MCC.

The benefits of a pre-approved authorisation

HMRC will allow businesses to account for their goods on a monthly or quarterly basis instead of on an individual entry basis which can significantly reduce the amount of paperwork that may be required.

IPR Suspension

HMRC are actively promoting Inward Processing Relief (Suspension) as an alternative to IPR Drawback. The benefit of IRP Suspension is that it allows duties and taxes to be suspended at import provided that post-processing, the goods are re-exported rather than the rigmarole of paying duties and taxes and then reclaiming them periodically.

It is unclear whether HMRC has legal grounds to take this action in advance of implementing the new customs code. If your business will be adversely affected by the removal of simplified IPR then please contact us.

To arrange a free first consultation to discuss which duty procedures may benefit your business or how the proposed changes to the Modernised Customs Code may impact upon your customs practices call us on 01905 619229 or send us an email at: mail@internationaltradesolutions.co.uk.

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