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HMRC internal manual

Customs Special Procedures Manual

Specific rules and processes relating to Outward Processing: rate of yield and 'average' rate of yield

UCC Article 255 specifies that a rate of yield (or average rate of yield) should be determined.

Average rate of yield

If you hold a UK authorisation and regularly carry out processing operations under OPR you can apply to your supervising office to use an average rate of duty to calculate the duty due on your compensating products.

The average rate is calculated as a percentage of the processing costs and will take account of the normal amounts of relief which you are able to claim.

You will normally be authorised to use the agreed rate for a period of not more than 12 months at a time. As duty rates often change on 1 January, it is probably most convenient to use calendar years as the basis for periods of authorisation.

At the end of an authorised period, you must perform the normal duty calculations using the total quantities of goods exported and imported in the period. Any difference between the duties paid using the average rate and the correct amount due, should be paid, or reclaimed, at this time. If necessary, a new average rate should be calculated and agreed with customs for use over the next period.

Using an average rate of duty to calculate duty relief

The average rate is calculated as a percentage of the actual processing costs only, as opposed to the total customs import value. The rate will be set for a period not exceeding 12 months (preferably for a calendar year), on the basis of either:

  • an approximate estimate made in advance, of the duty payable for that period, or
  • the duty actually paid during a previous 12 month period, adjusted to take account of changes in duty rates.


A trader exports fabric, lining material, buttons, zips, etc, to Morocco for making up into men’s suits which are re-imported to the UK. (For the purposes of this example preference rates are ignored).

The normal calculations for a period might be as follows:

  Cost Duty rate Duty relief Duty payable
Cost of fabric £10000.00 9.2% £920.00  
Cost of lining material £5000.00 5.7% £285.00  
Cost of buttons £500.00 3.7% £18.50  
Cost of zips £750.00 7.7% £57.75  
(Export total) £16250.00   £1281.25  
Processing cost £7500.00      
Freight, insurance, etc £2000.00      
Customs value £25750.00 12.8%   £3296.00
of imported suits =       - £1281.25

The average rate of duty, based on the processing costs only, would therefore be:

£2014.75 x 100 = 26.86%

So that the duty calculated is not less than the duty actually due, this is rounded up to 27%. The trader may therefore enter all future consignments over the next calendar year at this rate, against the processing costs.

The C&E 1154 should be presented along with the entry but only Boxes 4 to 8 need be completed. The heading of Box 6 should be amended to read ‘Total cost of processing’ and the agreed average duty rate inserted in Box 7. Boxes 9 to 14 should not be completed.

Due to practical difficulties, eg with currency exchange rates, an average duty rate may not be applied to processed products for OP involving another Member State (previously known as ‘triangulation’).

Producing more than one type of compensating product

When using the ‘added value’ method and the costs of process are shown separately for each product, an OP trader will need only apportion the freight and insurance charges and apply the appropriate duty rate to each amount.