Definitions of Terms in UK Import Procedures

This report sets out to define some of terms used in UK Import Procedures.

Authorized Economic Operator (AEO)An AEO is an economic operator who, by satisfying certain criteria, is considered to be reliable in their customs operations throughout the European Community and is therefore entitled to a number of benefits such as a lower risk score, fast tracked consignments, recognised status across the EC, and an industry ‘kite mark’ and useful marketing tool. Depending on the type of AEO certificate applied for and granted, these can include either easier access to certain customs simplifications or certain facilitations from customs security and safety controls, or both. There are three types of Certificate: Security and Safety, Customs Simplification and Customs Simplification/Security and Safety. HMRC Notice 117 (February 2010) refers.

C88The C88 is the customs declaration form completed by importers or their agents to declare goods to Customs. It contains information about the parties involved in the import, the means of transportation of the goods and statistical data. Agents can input the data direction through the CHIEF system and produce a ‘plain paper’ print which contains all the same information as a C88. This is called a Trader input Plain Paper C88. All entries, whether input electronically or through submitting a C88 will, once accepted by Customs, be issued with a unique entry number. This number is printed on the Entry Acceptance Advice and is the proof that the entry was input and accepted by Customs.

Common Agriculture Policy (CAP) LicenceThe system of CAP licensing provides much of the information needed for the management of the European Community’s agricultural market sectors. Many agricultural commodities cannot be imported into the European Community without a valid licence. Licences may also be used to restrict imports by imposing quantitative limits, or allow a reduced rate of duty. They are usually issued by RPA (Responsible Paying Authority) on request against a security, which is forfeited if the quantity of goods for which the licence was issued is not imported. Licences issued in other Member States are valid in the UK. HMRC Notice 780 (May 2003) refers.

Community System of Duty Reliefs (CSDR)Subject to varying conditions, CSDR provides a range of reliefs from import duty on goods imported for specific purposes. In some cases, there are parallel reliefs for VAT and Excise Duty. Organizations providing educational, scientific, medical or cultural services or involved in the testing of goods for information or commercial research can benefit, as can individuals importing personal belongings, inherited goods, specialised goods for the disabled, private gifts or awards or decorations conferred on the individual.

Community Transit (CT)CT is a Customs procedure, which allows goods not in free circulation (goods imported from outside the European Community (EC) on which no customs formalities have been completed and no duty has been paid), and those few Community goods for which CT is required, to move within the EC. Whilst under the procedure the payment of any customs duty or other charges is duty suspended. CT is also used to control the movement of such goods to and from Andorra, San Marino and the “special territories” of the Community such as the Channel Islands. The procedure has also been extended to cover the movement of goods across the EFTA countries (Iceland, Lichtenstein, Norway and Switzerland) by virtue of a separate customs convention and is then known as “Common Transit”.

Customs Freight Simplified Procedures (CFSP)
HM Revenue and Customs devised the CFSP’s to facilitate the movement of goods through Customs faster and more easily. There are presently two types of CFSPs, both of which are covered through the Customs Handling of Import and Export Freight (CHIEF) system. These are the Simplified Declaration Procedure (SDF) and the Local Clearance Procedure (LCP). The relevant HMRC notice for these procedures is Notice 760 Customs Freight Simplified Procedures (CFSP).

Customs Handling of Import and Export Freight (CHIEF)This is the name of the computer system used by HM Revenue and Customs to log all imports and exports into the United Kingdom

Customs Procedure with Economic Impact (CPEI)The CPEI procedures are a set of procedures, all of which are designed to help businesses based in the European Community to compete in the global market economy. Importers can suspend paying duty and VAT on goods covered by CPEI arrangements. The procedures that are covered by CPEI are Outward Processing Relief (OPR), Temporary Imports (TI), Inward Processing Relief (IPR) and Processing under Customs Control (PCC).

Customs WarehousingA full description of Customs Warehousing can be found in HMRC Notice 232.
Customs Warehousing is a storage arrangement where the payment of import duties and/or VAT is suspended or delayed when non-Community goods are stored in premises or under and inventory system authorised as a Customs Warehouse. A Customs Warehouse can either be a defined location (such as premises or place) or an inventory system authorised by HM Revenue and Customs for storing non-Community goods. Depending on the circumstances, a defined location can be the whole of a building, an open site, a silo or a storage tank.

There are 6 different types of Customs Warehouses in the European Community classified as A – F. Types A, C, D and E are available in the UK.
A is a Public Warehouse, which is authorised for use by warehouse keepers whose main business is the storage of goods deposited by other traders (depositors).
C is the basic Private Warehouse, where goods are stored which have been deposited by an individual trader authorised as the warehouse keeper. The warehouse keeper need not necessarily own the goods but must be the depositor.
D is an alternative Private Warehouse, appropriate to traders who primarily import goods for free circulation. Any removals to free circulation must be made using the local clearance procedure using the rules of assessment established when the goods are entered to the warehousing procedure. The rules of assessment cover the nature, value and quantity of the goods.
E is another form of Private Warehouse in which a company and its commercial accounting and stock control systems are authorised rather than a defined location. The rules of assessment arrangements applicable in a type D Warehouse can also apply if requested.

Different types of Duty chargeable on UK ImportsAnti-Dumping Duty (ADD) is an import duty charged in addition to normal customs duty and is applied across the whole European Community. It is designed to allow the European Community to take action against goods that are sold at less than their normal value – that being defined as the price for ‘like goods’ sold in the exporter’s home market. It is possible for goods charged anti-dumping duty to also be charged Countervailing duty.
Countervailing duty (CD) is a customs duty imposed on goods which have received government subsidies in the originating or export country. For customs purposes it is treated in the same way as anti-dumping duty. It is possible to have both anti-dumping duty and countervailing duty on the same product.
Customs Duty is a tax charged on importation of goods produced outside the European Community and is charged as a percentage of the total value of the goods (sterling equivalent if the goods are imported in a currency other than sterling).
Excise Duty is a tax on certain goods such as alcohol and tobacco. The rate of Excise Duty on alcohol products is based on their alcohol content and volume and, in the case of wine and cider the rate also depends on whether they are still or sparkling. The rate of Excise duty on cigarettes is based on a percentage of the retail price. For other tobacco products such as cigars, Excise Duty is charge at a flat rate per kilo.

End Use ReliefEnd-use is a Customs procedure which provides relief to promote certain European Community industries and trades. To qualify for relief the goods and/or processes must be eligible for end-use, the trader must be authorised for the relief (except for certain goods detailed in the Customs Tariff) and the goods must be put to their prescribed end-use within agreed time limits. HMRC Notice 770 refers.

Free ZoneA Free Zone is a designated area in which non-Community goods are treated as being outside the Customs territory of the Community for purposes of import duties. This means that import duties (including agricultural charges) are not due provided the goods are not released for free circulation. Import VAT is also suspended until the goods are removed to the UK market or used or consumed with the Free Zone. UK Free Zones are controlled principally on the basis of the requirements of customs warehousing procedures. There are no special reliefs in Free Zones from other taxes, excise duties or local authority rates. There are currently 5 Free Zones in the UK located at Liverpool, Prestwick, Sheerness, Southampton and Tilbury. To operate within Free Zones a trader need prior authorization from Customs and a supporting letter from the Free Zone Manager. HMRC Notice 344 Free Zones, refers

Inland Clearance Depot (ICD)An ICD is an inland site, usually made up of individual transit sheds, approved by Customs for the temporary storage, examination and clearance of goods controlled by customs officers at the local customs office. An ICD may be used for the storage of freight not subject to temporary storage control. The area used for holding goods in temporary storage must be clearly demarcated from any other area within a transit shed and this information clearly shown on the site plan.

Inward Processing Relief (IPR)IPR provides relief to promote exports from the European Community and assist Community processors to compete on an equal footing in the world market. Duty is relieved on imports of non-European Community goods which are processed in the Community and re-exported provided the trade does not harm the essential interests of Community producers of similar goods. It can provide relief from customs duty, anti-dumping duty and countervailing duty. Import VAT and excise duty is not due when entered to IPR Suspension but is due if entered to IPR drawback. HM Revenue and Customs Notice 221 (September 2007) refers.

Local Clearance Procedures (LCP)This is one of the Customs Freight Simplified Procedures (CFSP) which allows traders to remove their goods from the frontier and clear them at a designated premises inland. Please note, however, that to use LCP, the trader needs additional authorization for the transit procedures as well as the authorization for CFSP. In addition, the trader must be authorized to hold a comprehensive guarantee or guarantee waiver to become an authorized consignee.

National TransitThis relates to the transport of goods within the United Kingdom only. The National Transit declaration takes the form of a simplified Single Administrative Document SAD known as a Simplified Frontier Declaration (SFD), which must be submitted electronically to CHIEF via Direct Trader Input (DTI) to effect release of the goods. This SFD only requires a minimum number of boxes to be completed. For CFSP purposes the CT comprehensive guarantee/guarantee waiver is restricted for use with National Transit movements only. Any goods released from the frontier using national Transit must move directly to the trader’s designated premises inland. A time limit is set within which the goods must be presented at the office of destination and for the purposes of National Transit this time limit must not exceed three working days.

New Computerized Transit System (NCTS)NCTS is a European Community wide system, based on electronic declaration and processing, which is designed to provide better management and control of goods under CT (Community/Common Transport) procedures. Where an NCTS declaration has been made, official evidence of export will be confirmation that the CT procedure has been discharged.

Outward Processing Relief (OPR)OPR provides duty relief on imports from third countries of goods which have been produced from previously exported Community goods. It enables businesses to take advantage of cheaper labour costs outside the EC, while encouraging the use of EC produced raw materials to manufacture the finished products. Goods may be also temporarily exported to undergo processes not available in the European Community.
The procedure also enables faulty goods to be returned to a third country for repair, or for replacement with equivalent goods under the Standard Exchange System (SES).
HMRC Notice 235 (April 2005) refers.

Phytosanitary CertificateThis is a certificate required when importing plants and certain plant products into England and Wales. A phytosanitary certificate is a statement issued by the plant health authorities in the exporting country that the material to which it relates has been officially inspected in the country of origin or country of despatch, complies with legal requirements for entry into the European Community and is free from certain serious pests and diseases. From November 2008 all controlled plant health imports into England and Wales will be customs cleared only on receipt of a completed faxed copy of a Quarantine Release Certificate (QRC). This certificate can be obtained from the Defra PEACH system. Please note that Customs will no longer clear consignments with a phytosanitary certificate.

Processing under Customs Control (PCC)Generally speaking imported goods carry higher rates of duty than the raw materials or components from which they are manufactured. In some cases, however, processed products attract a lower rate of duty than the goods from which they are made. In some cases these tariff anomalies tend to make it more economical to import finished products directly from outside the European Community, than to import the raw materials and manufacture the products in the Community. The PCC procedure is a trade facilitation measure, intended to encourage processing in the Community by allowing certain raw materials or components to be imported under duty suspension arrangements. After processing, the finished products may be declared to free circulation at the lower rate that applies to them rather than the rate which applies to the raw materials. HMRC Notice 237 (June 2003) refers.

Rejected ImportsIt is possible to obtain repayment or remission of import charges on imported goods which are rejected because they are not in accordance with the contract or are defective.

Returned Goods Relief (RGR)This is a procedure which allows traders to import returned goods free of duty and tax. RGR is available to goods being re-imported to the European Community which, at the time of export were in free circulation, or were compensating products resulting from an inward processing operation, or had previously been imported at a reduced rate of duty. HMRC Notice 236 refers.

Simplified Declaration Procedure (SDP)SDP is one of the Customs Freight Simplified Procedures and is used for releasing goods at the frontier to another customs procedure such as free circulation, IPR (Inward Processing Relief), Processing under Customs Control, End Use, Temporary Imports, movement into a Free Zone or into Customs Warehousing.

Temporary Storage (TS)Goods have the status of goods in temporary storage from the time they are presented to Customs until they are assigned to a Customs approved treatment or use. A temporary Storage or approved depository facility is a place situated inside or outside the approved area of a sea or airport, where non-Community goods may be placed in storage prior to being assigned to a Customs approved treatment or use. Such facilities are authorized by HM Revenue and Customs for this purpose. An approved depository can only be used for the storage of personal effects whilst temporary storage facilities are generally used to store commercial non-European Community goods. HMRC Notice 199A (May 2009) refers.

Maria Narancic from Point to Point Export Services is an independent international trade adviser who assists organisations world wide with their international trade projects, documentation, Documentary Credits and import/export training.  She is based in the United Kingdom.  If you require any further assistance with the matters mentioned above, please do contact us by e-mail on info@point-point.com or check out other articles on importing on the Point to Point Export Services website at www.point-point.com
 

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