Conditions and requirements on economic conditions/Test
Information on conditions and requirements on economic conditions and test.
The aim of inward processing is to promote manufacturing within the UK and export from the UK to help UK businesses compete on an equal footing on the world market. The use of IP should not disadvantage other UK producers, and in certain circumstances an examination of the economic condition (an ‘economic test’) may be needed.
In the context of economic condition, the burden of proof as to whether evidence exists that the essential interests of UK producers are likely to be adversely affected by an IP authorisation lies with the producers in the United Kingdom. Where an examination of the economic conditions is necessary, HMRC is always responsible for taking the decision on the application for an authorisation following an economic test.
If goods are entered under an IP authorisation, they may need an economic test to check that the authorisation does not affect other UK businesses negatively. This would depend on the goods being imported, and the action the authorisation holder takes.
IP can effectively cancel the customs duty which would otherwise protect UK businesses. Certain IP authorisations are subject to an economic condition that authorisation may not be granted or allowed to continue where evidence exists that this will harm the essential interests of UK producers and, on the basis of an examination of the available evidence (an ‘economic test’), the authorising officer is satisfied that this would be the case.
More information on economic tests can be found at Request an economic test for an inward or outward processing authorisation - GOV.UK (www.gov.uk)
When a person applies for IP, the correct economic code or codes must be included on the application for IP.
A table of processes and their corresponding economic codes for cases in which the economic conditions are deemed to be fulfilled for IP is included in our guidance and legislation.
More information on economic code can be found at Get an economic code to apply for inward processing - GOV.UK
Links to Legislation