Production accessories and Catalysts
Information on Production accessories and Catalysts.
Production accessories are goods which are not found in re-exported products, but which allow or facilitate their production. They may be partially or entirely used up in the production process but relief from the duty due on them may still be allowed.
For the purposes of this section the term ‘catalysts’ covers all agents and production accessories.
‘Catalysts’ can be entered to inward processing for use on non-UK goods or free circulation goods. The processed products must be exported outside the UK to discharge duty liability on the catalyst.
Any duty liability calculations are based upon the amount of catalyst used to manufacture the ‘processed products’. If goods that are claimed to be catalyst are present in any processed products, they must not be considered under this section.
Where catalysts are to be entered to IP for use on free circulation goods, a guarantee for the duty and import VAT on the catalyst may be required. This is to ensure that the processed free circulation goods are intended for export outside the UK and to prevent any advantage being gained over importers who enter catalysts to free circulation for similar operations.
Catalysts include:
- chemical reaction accelerators, retarders, or arresters
- goods needed to protect products during or after their working
- goods required to create the physical or chemical environment essential for the performance of certain processing operations
If catalysts are to be used to assist processing of free circulation goods, details of these production accessories should be included in the IP SP3 form to enable HMRC identify the free circulation goods to be processed and the intended destination of the processed products. The application and authorisation letter must clearly show the proportion of catalyst deemed to be present in all the processed products.
Although catalysts are not found in the processed products, a rate of yield for the catalyst used during processing must be established so that duty liability on the catalyst used to produce each processed product can be accounted for.
Where the catalyst is used in the processing of IP goods, the processed products may be exported or placed with a view to being subsequently re-exported under the Customs Warehousing, IP, and Temporary Admission.
If catalysts are used to process free circulation goods, the processed free circulation products must be exported from the UK to discharge the liability on the catalysts. Details of the free circulation goods to be processed and the products produced must also be identified in the notification letter.
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The catalyst is entirely used up and all products produced (Main and Secondary Processed Products) are exported from the UK
- Relief/charges due - Full duty relief is available on all the catalyst
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The catalyst is entirely used up but only a percentage of the products produced are exported from the UK.
- Relief/charges due - Duty relief is available on the amount of catalyst used to produce the quantity of processed products that are exported
Duty will be due on the amount of catalyst used to produce the quantity of processed products on which any customs debt is due/processed free circulation goods not exported
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The catalyst is only partly used up in the processing operation and only a percentage of the main processed product are exported from the UK
- Relief/charges due - Duty will be due on any catalyst used to produce the quantity of processed products on which any customs debt is due/processed free circulation goods not exported
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The catalyst can be re-used
- Relief/charges due -Duty will be due on any catalyst used to produce the quantity of processed products on which any customs debt becomes due/processed free circulation goods not exported
Duty will also be due on the proportion of catalyst used to produce the processed
product(s) that were exported, unless that proportion of catalyst:
is also re-exported
destroyed under customs super vision
an extension of the throughput period for the catalyst can be approved
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Repeated use of catalysts
- Relief/charges due -There is no limit on the number times a catalyst can be used provided that the processed products resulting from those operations are exported from the UK. Any extension of periods for discharge for catalysts may only be approved if they are to be used in further processing of goods for export from the UK. If catalysts used on processed products that were re-exported can be re-used and are subsequently released to free circulation, the ‘economic’ value of the catalyst should be considered.
The economic value can be determined by dividing:
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the value of catalyst used on processed product(s) that were re-exported
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the number of times or length of time, the catalyst can be re-used for the same purpose
This value should be deducted from the original value of the catalyst that was entered to IP.
For example: catalyst entered to IP can be used for 10 years:
| Catalyst imported | Relief on catalyst |
| Value £10,000 | The economic value of the catalyst would be 10 years / £10,000 = £1,000 per year |
| Re-useable for 10 years | The proportional value of the catalyst used to produce the processed products would be £1,000 |
| 10 processed products produced during the first year and subsequently re-exported. The catalyst is then released to free circulation | The remaining proportional value of the catalyst released to free circulation would be £10,000 - £1000 = £9000 |
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Catalyst residues
- Relief/charges due - If catalysts are used up during processing and lose their catalytic properties but residues that cannot be used further in that processing operation are left over, they should be identified in the authorisation as a SPP. Where such residues are retained within the UK, the rate of yield should be used to establish the amount of catalyst deemed to be present in those goods.