MGC Processing

Inward and outward processing are special customs procedures that allow businesses to import or export goods for processing or repair without paying full import duties and VAT.

Inward Processing

Inward Processing allows businesses to import raw materials or semi-finished goods from outside a customs area without paying customs duties or import VAT, as long as those goods are processed and subsequently re-exported or released to another IP trader. Also this regime allows goods to be imported for repair and return.

Benefits
  • Duty Suspension: You don’t pay customs duties or VAT on the goods imported for processing/repair.

  • Flexibility: You can use equivalent (identical) free circulation goods instead of goods imported to custom procedures.

Process
  • 1
    Import goods for inward processing.
  • 2
    Process or repair the goods.
  • 3
    Re-export the processed or repaired goods or transfer to another IPR trader.
  • 4

    Submitting regular returns for these processes will be a HMRC requirement as defined by HMRC in their approval document. MGC can assist with this function as required by the authorised company.

Outward Processing

Outward processing enables businesses to temporarily export goods for processing outside the customs area and then re-import the finished product or semi-finished product at a reduced duty rate.

Benefits
  • Duty Relief: Upon re-importing the processed goods, customs duties are only paid on the added value (i.e., the cost of processing or the value added during the time the goods were outside the country).
  • Cost Savings: This can be particularly useful for companies looking to outsource manufacturing processes to countries with lower production costs.
Process
  • 1
    Temporarily export goods for processing/repair.
  • 2
    Process the goods outside the customs area.
  • 3

    Re-import the processed goods.

  • 4

    Submitting regular returns for these processes will be a HMRC requirement as defined by HMRC in their approval document. MGC can assist with this function as required by the authorised company.

Key Differences

Inward and outward processing are valuable tools for businesses involved in international trade. By understanding these customs procedures, businesses can optimize their supply chains, reduce costs, and improve their competitiveness in the global market.

For any further enquiries around these customs regimes, please don’t hesitate to contact MGC through the contact form on the website.

Feature Inward Processing Outward Processing
Direction of Goods Import for processing Export for processing
Duty Payment No duty on imported goods Duty only on added value
Purpose To process or repair imported goods To process goods outside the customs area
Additional Considerations
  • Authorisations: Both inward and outward processing require authorization from customs authorities. HMRC offer a number of options with regards to these authorisations:
  • “Full Authorisation” where a permanent special procedure is set in place with an agreement between HMRC and the trader
  • “Authorisation by Declaration” where the trader can utilise the regime to cover goods up to 3 times in a year where goods are values up to £500,000
  • “Retrospective Authorisation” where goods imported within the last 12 months approximately, can qualify for an authorisation
  • Time Limits: There are time limits for processing and re-exporting or re-importing goods.
  • Recordkeeping: Businesses must keep detailed records of all inward and outward processing operations.
trade associations

Trade Associations

At MGC Import Export Consultants Ltd, we take pride in delivering high quality customer service. As an independently run business that focuses on our clients, with value-add support services, we offer flexible global logistics solutions along with consultancy services and training for all aspects of international trade.

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We believe by understanding your business requirements fully, we can offer a tailored service to suit your company import and export requirements.

Our experienced logistics team focus on providing a quality, timely service at a competitive price.