Outward Processing Relief
- HM Revenue & Customs
- Part of:
- Import and export procedures and Import and export: customs declarations, duties and tariffs
- 6 August 2012
- Last updated:
- 29 February 2016, see all updates
How EU traders can claim relief from duty on goods temporarily exported for processing or repair in a non-EU country.
How OPR works
Outward Processing Relief (OPR) allows EU traders to temporarily export goods from the EU for processing or repair in a third (non-EU) country and then claim full or partial duty relief when the goods are re-imported.
You can’t use OPR in conjunction with the Common Agricultural Policy.
Before you can claim any duty relief you must apply for an OPR authorisation and ensure your exported goods and the process or repair they’re to undergo are eligible for duty relief. To be eligible the goods must:
- originate in the EU
- have been imported to free circulation within the EU with all customs formalities completed and customs charges paid in full
Find out more about OPR and the customs procedures and reliefs that apply to your business.
Duty and VAT
VAT is generally payable on all goods and services imported from outside the EU at the same rate that would apply to the goods or services if supplied in the UK. Relief from customs duties and reduced import VAT may be available if the following conditions are met - and you declare them to have been met - at re-importation:
- the goods were in free circulation and temporarily exported from the EU
- it was made clear when the goods were exported from the EU that they were going to be re-imported after processing or repair by using the appropriate customs procedure code on the export declaration
- re-importation took place after the goods were processed, repaired, made up or reworked outside the EU
VAT will be due on the full value of the goods if:
- ownership of the goods is transferred
- the goods are deemed irreparable and replaced with a new item
You can appoint an agent, who must be based in the EU, that can enter your goods into free circulation. They must provide you with copies of all your import and export declarations for your records as you’re responsible for ensuring they’re correct. They must use your OPR authorisation number and keep written records of all exports and imports under OPR. If these records are stored on a computer you must inform your customs office so they can check your systems are compatible.
You’re liable for all customs debts where an error is made concerning your customs declarations. A separate OPR authorisation from Turkish authorities is required if you’re exporting goods for process from Turkey. To apply for Turkish OPR authorisation you’re normally required to have a permanent establishment in Turkey.
Inward Processing and OPR
If your business handles Inward Processing (IP) goods but you then need to export them for further processing, this can be done under OPR.
For your goods to be eligible for OPR once they’ve been re-imported, they must be placed in IP again and not free circulation. You’ll need authorisation under OPR and IP. There’s more detailed information in Volume 3 of the Trade Tariff. You can also see the guide to exporting goods outside the EU, or more detailed information in Notice 3001.
Types of OPR authorisation
There are several types of OPR authorisation. It’s important to apply for the correct authorisation for the goods you intend to export and the process or repair you wish to use to avoid paying unnecessary customs duty.
Authorisation by Declaration (repairs only)
You can use this if you only send goods outside the EU for repair and only occasionally need to use OPR. You must apply using SAD form C88.
Full UK authorisation
This type of authorisation is the one most commercial businesses with operations in the UK will need to obtain. If you’re exporting goods for any kind of process or repair for the UK only this is the type of authorisation required. You’ll need to apply on form SP4.
Authorisation involving more than one member state
Use this authorisation if you need to export or re-import your goods in more than one member state including the UK. Application is normally made in the member state where your main accounts are held and where at least part of the temporary export operations will be carried out. You should make your application using form Annex 67 at least 2 months before your first consignment of goods reaches its destination.
Standard Exchange System (SES)
Use SES to import temporary replacements for goods you may need to export for repair. This is called ‘prior importation’. For example, you need machinery for a short period while your own goods are repaired and returned to you. If you want to use SES with prior importation, HM Revenue and Customs (HMRC) will ask you to provide a guarantee to cover the potential duties due on the goods you import. You need to apply using form SP4 before you import your replacement goods.
This relates to personal property sent outside the EU for repair. You can only use this type of authorisation when the goods have no commercial purpose. You must apply using the SAD form C88.
See further guidance on the Single Administrative Document for import and export
Identifying OPR goods
It must be possible to identify the exported goods in the compensating products. They must be clearly identifiable by reference to items such as invoices, serial numbers and marks.
For OPR operations involving more than one EU country you’ll need to request form INF2 (Information Document C&E 1155) issued by your customs office and endorsed by the customs authorities at the port or airport at export and re-import.
It may not always be possible to prove the goods you exported were used in the process that’s taking place in the third country. For example, where chemicals exported for process are placed in common bulk storage tanks at the processor’s premises before manufacture of the product.
In these cases you can claim duty relief on an equivalent quantity of goods that produced the products you subsequently re-imported.
If you’re going to use equivalence the equivalent goods should have the same 8 digit Tariff Commodity Code and technical specification as the exported goods. You must state you’ll be using equivalence when making your OPR authorisation application. To find out more about Tariff Commodity Codes, see the guide to classification rules and the Tariff.
Rate of yield
Goods exported under OPR must have a rate of yield calculated. This is the quantity of product that will be produced from any given quantity of exported goods. On your OPR application you must specify how this calculation will be carried out.
For example, the yield for a dressmaker might be expressed as ‘one for one’ (where no wastage has occurred), or one dress per 3 metres.
You can’t use percentages to calculate rates of yield as wastage in production is included in the calculation of the quantity of exported goods used.
If you import a number of different products made up of several different materials you can supply a bill of materials for each product. It’s important to get these calculations right as they’ll determine the level of duty you’ll pay.
Guarantees for OPR products
Normally there are only 2 situations where your business would have to provide a guarantee to use OPR:
- when you’re authorised to use the SES
- you wish to use prior importation
In these situations you’ll have to provide a guarantee - in cash or via an arrangement with your bank - to cover any potential duty. The guarantee you provide when using SES will be returned to you when you produce a copy of the export declaration.
Which records to keep
To ensure you always pay the correct amount of duty on your re-imports under OPR it’s essential to keep accurate records. These must show:
- what the goods were
- when and to where you exported them
- what processes were carried out on them
- what the compensating products were
- the information necessary to calculate the duty relief
- when and where they were re-imported
- the rate of yield
Apply for OPR authorisation
To ensure your business doesn’t pay too much duty on the repaired or processed goods you’re re-importing it’s important to obtain your OPR authorisation as soon as possible.
You should make your application for OPR authorisation at least one month before your first consignment is exported (or 2 months if you’re applying for an authorisation covering more than one member state). There are exceptions to this, including if you’re:
- a private person handling non-commercial goods
- using authorisation by declaration for repair
After submitting your application for OPR authorisation
Once you’ve made your application, HMRC may contact you if more information is required, or may visit your premises. Your authorisation number will then be issued. This process takes approximately 30 working days. The period of your authorisation will also be stated. You must keep all records linked to your claims for OPR for 4 years after your authorisation expires and these must be available for inspection on request.
If you intend to present your export declaration documents at one customs office, but present the corresponding re-import documents at a different office or within another member state use form INF2 - check with your local supervising office for guidance.
If you need to make changes to your authorisation you must notify your supervising office in writing.
If you want to add a new member state to an authorisation covering more than one member state as a place of export, HMRC may need to consult with the member state involved before the amendment can be granted. This can take some time, so allow for this in your schedule. You can’t gain duty relief on the re-imports of your goods until a full OPR authorisation is in place.
Changes to your business name can usually be made to your OPR authorisation, but if your business status changes to a limited company for instance, you may have to apply again for OPR authorisation as your new business.
If you need to renew your OPR authorisation it’s your responsibility to contact your supervising office at the appropriate time. You’ll not be issued a reminder.
If you require a retrospective authorisation this can be considered by HMRC on a case by case basis. Retrospective applications should be made on form SP4.
You can cancel your OPR authorisation by stating this in writing to your supervising office.
Exporting OPR goods
OPR impacts on a number of other processes.
Goods need to be declared by exporters as OPR when lodging an export declaration using 2 systems:
Using the SAD form C88 declaration for export
The SAD is used to declare all OPR exports prior to processing. The SAD should list commodity codes identifying the goods to be exported. If you have difficulty classifying your goods, email the Tariff Classification Service. It’s also possible to request a tariff classification using the electronic Binding Tariff Information (eBTI) which is accessed via the Government Gateway.
There’s more about classifying goods and the eBTI system in Notice 600: classifying your imports or exports.
Your SAD form must contain specific information, including the following:
- box 31 should contain clear indicating marks identifying your goods - if not, this could lead to your goods not being allowed re-entry into the UK under OPR - this information is very important if you’re using authorisation by declaration
- in box 37 for normal community goods, quote the correct customs procedure code
- quote your OPR authorisation number in box 44 - if you’re also using inward processing, this number must also be entered
Presenting evidence of export for OPR goods
It’s important to track the progress of your goods as they move in and out of the EU.
When your goods first leave the UK, ensure you have evidence that clearly shows the Declaration Unique Consignment Reference (DUCR) number to prove the goods were declared to OPR when they were exported. The DUCR is generated by HMRC’s CHIEF and national export systems after they’ve processed the export declaration.
Any consignments you intend to re-import that will be in a split consignment must be accompanied by form INF2.
Where to present evidence supporting your OPR shipments
How you present the evidence you’re using to support your OPR shipments will depend on where you’ll be entering your goods in the UK when you re-import them.
If you enter the OPR procedure inland
When using Simplified Declaration Procedure (SDP) or Entry in Declarant’s Records (EIDR), retain your pre-shipment advice and your permission to proceed message that was sent to you. These documents should clearly show your DUCR number.
If you enter the OPR procedure at the frontier
When using either full declaration or SDP you or your agent should always retain a copy of the export entry and departure messages clearly showing the DUCR number.
OPR exports by post
The OPR system can also be used with the postal system. You should complete the standard SAD form C88 and take this along with the goods you want to export to your customs office, which may inspect the goods. You can locate your local office and request a SAD form C88 by calling imports and exports general enquiries.
For all postal exports you must complete form C&E 132 certificate of posting of goods. Once you’ve taken your goods to a post office, the certified form must then be returned to the customs office together with copy 2 of your SAD form. Form C&E 132 will be returned to you when your goods are re-imported.
You’ll still have to apply for prior authorisation to use the postal system with OPR.
Re-importing OPR products
Once your goods have been exported and have undergone process or repair they can then be re-imported to free circulation. The process or repair must have taken place otherwise the goods will be re-imported to a different procedure called returned goods relief.
Re-importing goods after process or repair
All of the goods you re-import under your OPR authorisation must be accounted for using the SAD form C88. This should contain all the commodity codes for which you hold an authorisation under OPR to re-import. Each code has a rate of duty allocated to it. These are contained in volume 2 of the Trade Tariff. As with the SAD used at export: boxes 31, 37 and 44 must be filled out correctly.
If you haven’t previously had to classify your goods you can read about the steps to take in the guide on classification rules and the Tariff. If you have difficulty classifying your goods, use the Tariff Classification Service.
Any restrictions or licences are also listed against each code in the Tariff.
It’s also possible to use the eBTI system to request a Tariff classification. Find out more about the eBTI system in Notice 600: classifying your imports or exports.
In addition to the correct commodity codes, the documentation connected to your re-imported goods must also contain additional information.
The Customs Procedure Codes (CPCs) appropriate to OPR re-imports are in the Volume 3 of the Tariff. If you don’t use the correct CPC, you may delay the clearance of your goods and also have to pay duty.
If you hold a UK authorisation covering more than one member state issued in the UK, you must enter the authorisation number in box 44. Re-imports using authorisation by declaration for repairs should show OP/9999/999/99 together with the DUCR number relating to the export declaration.
If you’re also using the customs freight simplified procedure you must adhere to special arrangements.
Other re-import documents
You must present sufficient documentation to prove the goods you’re importing were initially exported under OPR. This information is used by customs to calculate duty and rate of yield. The following documents may be used to present sufficient evidence:
- a copy of the export declaration and/or a copy of the departure message - this proves your goods were exported under OPR arrangements
- form C&E 1154 - all your OPR shipments must be accompanied by this form as it shows the exact status of your re-imported goods
- split Consignments and Triangulation Information Sheet INF2 C&E 1155 - this form enables you to use 2 different customs offices and also have split consignments
- guarantee or warranty - if your re-imported goods are the result of goods you exported for repair and have had their repairs carried out free of charge, you can use a guarantee or warranty to indicate this when your goods re-enter the UK
- other supporting documents - you must also produce any other documents necessary to support your claim to relief (for example, invoices for processing costs, freight and insurance charges) - full details of the documents needed to support the import SAD are given in volume 3 of the Trade Tariff
Service contracts or ‘bought’ warranties
Goods you send for repair where you have a standing arrangement to carry out those repairs won’t be indicated on the documentation accompanying the repaired goods when they re-enter the UK - this document enables you to indicate these kinds of arrangements and if you have a ‘one-off’ payment to make to your supplier.
These service charges are regarded as part of the value of the goods when they were originally supplied, and are liable to import duties. Similarly, an extended warranty for which a ‘one off’ payment is made is liable to duty as the charge for this type of warranty is regarded as part of the original price of the goods.
If you have goods repaired under arrangements similar to these, you’ll not be able to account for the customs charges on individual consignments. You must declare that you’re being charged for the repair facilities, and make arrangements with your supervising office to pay the duty and VAT charges when you make payments to the repairer for the service facilities.
Preferences for OPR
If the goods you’re re-importing under your OPR authorisation also have a preferential rate of duty attached to them you may be able to claim this reduction in duty.
You can claim the preferential rate of duty if you have valid certificates of preference for each of the goods you’re importing. You can find out more about this in:
- Notice 826: tariff preferences - imports
- Notice 830: tariff preference - new General System of Preference rules of origin
End-use and OPR
You may export for processing under your OPR authorisation, goods that have previously been imported to the European Union under end-use arrangements.
Duty on some goods you re-import for free circulation may qualify for a discount on the duty you would have to pay. You must have prior authorisation to take advantage of any end-use relief that may be available. You can read more about imported goods and end-use relief in Notice 3001: special procedures for the Union Customs Code.
How to calculate duty for OPR
Calculating customs value of OPR goods
A re-imported consignment under OPR must be valued just like any other normal import for duty, VAT and statistical purposes. You must use the added value method to calculate the value of your OPR goods. You can read more on the valuation of imported goods in Notice 252.
Duty is charged on the costs of processing the exported goods and transporting the compensating products back to the EU. To apply this method you must:
- deduct from this the value of the exported goods used in the manufacture of the compensating products, applying the agreed rate of yield as appropriate
- account for duty on the difference between the 2 values, at the rate which applies to the imported compensating products
In most cases, where the exported goods are liable to a positive rate of duty, using this method will provide maximum duty relief. Read guidance about calculating valuation.
Help with OPR
OPR can be complex to set up and manage. Contact imports and exports general enquiries if you need help.
Outward Processing Trade (OPT) in textiles allows fabric of EU origin to be exported for processing and for finished products to be re-imported into the EU without the need for a specific licence. If you want to use OPT you must have authorisation granted by the Department for Business, Innovation and Skills (BIS). Further information can be obtained from:
ILB Enquiry Point
Telephone: 01642 364 343
If you re-import goods in the same state as they were exported, or they undergo only unforeseen minor treatment outside the EU, for example to keep them in working order, they may be eligible for returned goods relief.
Customs have developed export procedures both for inland and frontier clearance, enabling exporters and agents to lodge electronic declarations with the CHIEF for goods at approved premises, ports and airports. The declaration is validated before clearance is given and the cargo can be shipped. You can also find out about Export Procedures in Notice 275: Customs export procedures.
You can read guides on classifying imports and exports using the UK Trade Tariff and the classification of goods for further information.
Published: 6 August 2012
Updated: 29 February 2016
- This guide has been amended to include numerous changes following the introduction of the Union Customs Code (UCC). The guide has also been substantially rewritten to improve style and readability.
- Fixing references to specialist guides
- First published.
From: HM Revenue & Customs