Completion of authorised use and discharging liability
Information on discharging goods from authorised use and putting goods to alternative use.
Goods remain under customs supervision from the time of acceptance of the import customs declarations until they are put to the prescribed use. However, goods may be:
- used otherwise than in accordance with the authorised use rules
- assigned a permitted customs approved treatment or use
- exported or destroyed
Goods are generally considered put to the prescribed use upon first use in accordance with the provisions of the authorisation.
For example, vehicle parts for assembly are considered to have been assigned to that prescribed use when the vehicles have been assembled and left the assembly line.
The prescribed use can differ depending on the goods that have been imported. The authorisation notification should specify the point at which the goods covered by the authorisation are deemed to have been put to that use.
When goods have been put to their prescribed use or destroyed, the authorisation holder must tell HMRC by completing a Bill of Discharge (BoD) form. Authorisation holders can either submit individual or monthly BoDs. The authorisation holder is responsible for ensuring the BoD is received by the supervising office by the due dates. The supervising office will not issue any reminders. Failure to provide the above information will be considered as failure to submit a BoD and may result in a duty liability and civil penalty.
Evidence will need to be kept by the authorisation holder to demonstrate that the goods were put to their prescribed use. The type of evidence may depend on the goods involved. Examples may include invoices, orders and maintenance records.
Individual Bill of Discharge
For authorisation holders who have imported under a full authorisation, the BoD must be received by the supervising office either:
- 30 days from the end of the agreed period for discharge
- by the end of the month in which the procedure was discharged (if the goods were discharged earlier than the agreed period for discharge)
For authorisation holders who have imported under Authorisation by Declaration, the BoD must be submitted to HMRC within 30 days of the authorised use procedure being discharged.
Monthly Bill of Discharge
Monthly submission of BoDs is only available for authorisation holders who import under a Full Authorisation. The BoD must be received by the supervising office within 30 days from the end of the month in which the goods were put to authorised use. For example, if goods were put to use on 12 July, the BoD would be due by the 30 August.
If an authorisation holder is unable to submit their BoD by the due date, they must contact their supervising office.
A Nil Bill of Discharge is required where there are no discharges in a month. This requirement is for persons submitting monthly BoDs only.
Authorisation holders, who, for reasons beyond their control, are unable to put the goods to the prescribed use, are required to advise their supervising office of the facts without delay. There may be options for the authorisation holder that may not result in customs duty liability.
Extending period of discharge
If an authorisation holder requires an extension to their discharge period, they should apply in writing to their supervising office. The period may be extended, provided that the authorisation holder has adequate records to prove assignment to the prescribed authorised use and the proper conduct of operations is assured. This must be done before the initial period for discharge expires.
HMRC will also consider requests to extend the period of discharge retrospectively after the initial period of discharge has expired. This will be considered on a case-by-case basis.
An example of where the period may be extended is when goods have not been assigned to the prescribed authorised use on account of either unforeseeable circumstances, or circumstances arising from the working or processing of the goods.
An extension of the period of discharge is not guaranteed. If the request is not approved and goods are not put the prescribed use within discharge period, goods may be liable for customs duty.
Export of goods
An authorisation holder may be able to discharge the procedure by exporting the goods, even if they have not been put to an eligible prescribed use. While export of authorised use goods may be approved, export is not regarded as a normal method of eligible disposal for authorised use goods.
Where authorised use goods have been put to an eligible prescribed use and are then entered for export, they should be treated in the same way as any other free circulation goods.
A BoD may not be required if exporting goods that have not been put to their prescribed use. The authorisation notification will state if completion of a BoD is required.
Destruction of goods
An authorisation holder may be able to discharge the procedure by destroying the goods. To destroy the goods, permission must be requested from the supervising office. Requests to destroy should be made five working days in advance of the destruction.
The request must contain the:
- authorisation number
- EORI number
- Movement Reference Number (MRN), date of import, value at import, commodity code
- description and quantity of goods to be destroyed
- stock rotation or reference number
- reason for destruction
- method and process used to destroy goods
- date, time and address of intended destruction and residual value
- name of the company undertaking the destruction (if not the authorisation holder)
- signature of an authorised signatory
The destruction must comply with all national or local environmental, health and waste disposal regulations and requirements.
A certificate of destruction is required from the disposal company used or, in the event of destruction on site, a self-certificate signed by a director of the company in order to discharge the procedure.
Where applicable, copies of destruction requests and destruction certificates should be kept in the records and must be made available and presented to the supervising office upon request. A copy of the destruction certificate should be sent to the supervising office via email, or post. Destructions must be recorded in stock records.
If the destruction of the originally imported goods is achieved by undertaking a recycling process to create a residual product, this process must be carried out after an import customs declaration has been made to another customs procedure such as Inward Processing. The goods should be declared to the procedure using the Tariff Heading appropriate to the originally imported goods.
Waste and scrap from destroyed goods
It is expected that most customs destructions will not produce waste and scrap. On the occasions where destruction of goods placed under the authorised use procedure does produce waste and scrap and it could have residual commercial value, this waste and scrap is not regarded as domestic goods and is to be treated as imported into the United Kingdom on the date of destruction.
The goods are treated as being released to a customs warehousing procedure. A customs warehouse authorisation is not required to complete an import customs declaration for the waste or scrap. A record of the destroyed goods must be kept. There is no time limit to the length of the customs warehousing.
If the waste or scrap resulting from the destruction has a commercial value, then it will be liable for customs duty and import VAT. This is chargeable on the value and the rate applicable to the waste and scrap.
Waste and scrap may be re-exported, placed under inward processing or released for free circulation with payment of amount of import duty as established.
Liability of customs duty
If the authorisation holder is unable to put the goods to the prescribed use and does not export or destroy them, they will be liable for customs duty or in the case of specific essential bicycle parts, anti-dumping duty.
Read when an authorisation holder would incur a customs debt for more information.
Waste and scrap from the processing of goods
Waste and scrap which result from the working or processing of goods according to the prescribed use and losses due to natural wastage shall be considered discharged.
For example, an authorised use holder imports fish with either a reduced or zero customs duty rate. The fish is transformed into ready meals. During the processing operations, fish bones, scales and fins appear. They are considered as waste and scrap assigned to the prescribed use. The authorisation holder may use them freely (processing into glue or pet meals for instance).
Prior approval from HMRC must be obtained by the authorisation holder before granting any alternative use for goods imported under authorised use. The alternative use may result in a customs debt being incurred.
If the alternative use is also eligible for authorised use, the goods can benefit from the reduced authorised use rate. Any customs debt will be calculated on the difference between the two rates.
If the alternative use is not eligible for authorised use, the customs debt will be incurred at the point at which the goods are put to an ineligible use.
Inward Processing
Goods entered to Inward Processing can be declared to free circulation at the authorised use rate.
Inward Processing should not be authorised where the intention is to release goods to free circulation. Diversion of goods to authorised use may however be approved, provided it is not a regular or normal method of disposal, for example, where an export order has been cancelled.
In these circumstances, if the Inward Processing goods being diverted were eligible for authorised use at time of import, subject to being put to the prescribed use, duty on diversion can be calculated at the authorised use rate on the value of goods at import. This is provided that at the time of release the trader holds an authorised use authorisation.
Goods originally entered to authorised use are not normally permitted for diversion to Inward Processing. However, the goods can be used in the manufacture or repair of goods held under Inward Processing provided the nature of the process or repair constitutes an eligible disposal for authorised use (for example, fitment of an aircraft part). In such cases, use of authorised use goods is allowed as they are equivalent to free circulation goods being used for the same purpose.
Read the Inward Processing handbook for more information.
Outward Processing
Exporters can export goods under an Outward Processing authorisation which have previously been imported to and put to the eligible prescribed use under authorised use but have not been discharged from the procedure.
Authorisation holders cannot export authorised use goods if the goods have not been put to the prescribed use unless the reason for export is repair.
For more information on how to move export goods on CDS read:
- Requested Procedure 21: Temporary Export under Outward Processing.
- Requested Procedure 44: Release to free circulation with duty relief granted under the End Use Special Procedure
Read the Outward Processing handbook for more information.
Customs Warehousing
Entering authorised use goods to Customs Warehousing
Authorisation holders can declare authorised use goods into Customs Warehousing. Moving the goods to Customs Warehousing doesn’t discharge the liability of customs duty under the authorised use procedure. This can only be done by eligible discharge methods.
Goods removed from Customs Warehousing
Authorisation holders can enter goods to authorised use procedure on removal from the warehouse, as long as the goods meet all eligibility criteria.
Read the Customs Warehousing handbook for more information.