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HMRC internal manual

Customs Special Procedures Manual

Introduction: liability to import VAT, excise duties and additional charges

Liability to import VAT

The provisions for import VAT relief are contained in the Council Directive 2006/112/EC. This is interpreted into UK law in the Value Added Tax Act 1994 and the Value Added Tax Regulations 1995. Other national provisions and other VAT directives may also apply.

Import VAT may be reclaimed by VAT registered traders as input tax, subject to the normal VAT provisions.

VAT amendment regulations SI 2001/630 regulation 3.

VATA 1994 sections 15 and 16.

VAT regulations 1995 regulation 120.

Inward Processing (IP), Customs Warehousing (CW) and Temporary Admission (TA): Import VAT is not paid on goods imported to IP, CW or TA as no taxable event has taken place but it becomes payable (with the customs duties) if the goods are released to free circulation.

Outward Processing (OP): is a customs duty relief and the EU regulations governing it do not cover VAT. The conditions for claiming VAT relief are set out in Regulation 126 of the VAT Regulations (1995), and explained in Notice 3001. Products made from exported goods may benefit from VAT relief, but it is not necessary to hold an Outward Processing authorisation to claim relief from VAT. When there would otherwise be no customs duty due OP is of no benefit, and authorisation must not be granted solely to enable traders to obtain VAT relief.

End-use relief does not affect the liability to VAT, which must be paid or accounted for in the normal way. Import VAT becomes payable with Customs duty at the time of import.

Liability to Excise duties

The rules for excisable products under suspensive customs procedures can be found in Article 3(4) of Council Directive 2008/118/EC.

Excise duty is not paid on goods declared to IP and CW but it becomes payable with customs duty if the goods are released to free circulation.

Excise duty may remain suspended if the goods released to free circulation from a customs warehouse are deposited into an excise warehouse.

End-use: Excise duty if due, is payable at the time of import.

Agricultural component (EA) additional charges

These charges can be relieved under Outward Processing. They are covered by the term ‘import duties’ under Regulation (EU) No 952/2013 Article 5(20).