Guides / Inward processing · Updated 30 September 2026

Inward processing in the UK: duty and VAT relief for processing and repair

Importing goods to process, assemble or repair and then send them back out? Inward processing can stop Customs Duty and import VAT being paid on the way in. Here is how the two authorisation routes, the discharge period and the bill of discharge work, based on HMRC guidance.

This guide is also available in Polish.

What inward processing actually does

Inward processing (IP) is a customs special procedure for goods that come into the UK to be worked on and then leave again. According to HMRC, if you are authorised to use it you will not need to pay Customs Duty and import VAT on goods you import from outside the UK and then re-export. The goods enter the procedure, are processed or repaired, and are then "discharged" – most often by re-exporting them.

Typical users are manufacturers that assemble imported parts into products sold abroad, repairers who fix and return equipment for overseas customers, and businesses that finish, test or adjust goods before sending them on. HMRC also allows relief on certain production accessories – goods that help the process but do not end up in the final product, such as reaction accelerators or items that protect products during processing. Fuels and most lubricants are excluded.

If the processed goods stay in the UK instead, duty and import VAT may become payable. HMRC notes this may be a reduced amount where the duty rate for the processed product is lower than for the imported goods, depending on the valuation method you chose when applying.

Who can use it

To apply, HMRC says you need to:

• be established in the UK (non-established applicants are considered only for non-commercial imports, and need a full authorisation)
• hold an EORI number
• not have a poor history of compliance with customs requirements
• check whether you need a guarantee and whether you need an import licence

The authorisation holder is responsible for any duty or other charges that become due on the imported or processed goods, unless a transfer of rights and obligations agreement says otherwise.

Two main routes: authorisation by declaration or full authorisation

Authorisation by declaration

This is the lighter route for occasional users. You apply for IP within the import declaration itself at the border. HMRC allows this up to 10 times in a rolling year, for goods valued up to £500,000 for each import. You will usually need to provide security for Customs Duty and import VAT, which is refunded, minus any charges due, when the procedure is discharged.

It is not available if, among other things:

• you use simplified customs declarations
• you want a retrospective or backdated authorisation
• the goods are subject to anti-dumping duty
• you use economic codes 5, 6, 7, 8 or 12
• the goods are controlled goods (such as arms or drug precursor chemicals), works of art and antiques, excise goods, or meat for airline meals

Unless your authorisation says otherwise, goods imported this way must be discharged within 6 months.

Full authorisation

A full authorisation suits regular users. It lets you use IP routinely, use simplified declarations to import or export, and it is the only option for non-established applicants with non-commercial imports. HMRC asks you to apply at least one month before you start importing, online or using the print-and-post form. The application covers, among other things:

• the commodity code (at least 4 digits, or 8 digits for equivalence goods) and the economic code
• the process you will carry out, and how long it takes (this sets your period of discharge)
• the quantity and value of goods over the authorisation period – up to 3 years for sensitive goods and 5 years for other goods
• the rate of yield, how you will value goods released to free circulation, and what records you will keep
• names and addresses of any sub-contractors

Depending on the goods, HMRC may run an economic test to check the authorisation does not disadvantage UK producers. A retrospective full authorisation is possible only in exceptional circumstances, for up to 12 months before the application date (3 months for sensitive goods).

Declaring goods to IP

Goods enter IP with requested procedure 5100 on the import declaration, followed by an additional procedure code that fits the case. Re-exports of processed goods use their own procedure codes. If procedure codes are new to you, our guide to customs procedure codes explains how they are built, and CDS import declarations covers who files them.

Time limits and the bill of discharge

Your authorisation letter tells you the period of discharge. For a full authorisation it is based on the period you estimated in the application; for authorisation by declaration it is 6 months. The letter also names your supervising office in case you need to extend the period.

When processing is finished you must discharge the goods by:

• re-exporting them outside the UK (a full declaration is needed unless you are authorised for simplified procedures)
• declaring them to another customs procedure
• transferring them to another IP authorisation holder
• destroying them, usually only under customs supervision

You then send a bill of discharge to your supervising office no later than 30 days after the end of the period for discharge. Full authorisation holders use the BoD1, which HMRC says is still required even if no goods were declared to IP in the period. Users of authorisation by declaration submit a BoD3 to the National Imports Relief Unit. The form asks for your authorisation number, EORI, import declaration references, economic and commodity codes, customs value, suspended charges, and details of each disposal including the rate of yield. For declarations made in CDS, HMRC provides specific CDS forms; CHIEF, the older system CDS replaced, is only relevant for old entries still being discharged.

Worked example: EU components repaired and returned

A UK engineering firm receives faulty control units from a customer in Poland for repair and return. Because it only does this a few times a year and each consignment is well under the limit, it declares the units to IP by declaration, lodging security for the suspended duty and import VAT. The repair is a 1:1 process. After repair, the units are re-exported to Poland within the 6-month period, and the firm sends a BoD3 within 30 days of the end of that period to recover its security, less any charges due.

Two points are specific to UK–EU trade. First, HMRC says goods can be imported for repair or alteration from the other free trade agreement territory without applying Customs Duty, regardless of origin, provided they are already in free circulation there – but normal import VAT rules still apply, subject to the IP procedure. So for EU repairs IP is often about VAT as much as duty. Second, if processed goods are exported to an EU business that will continue the procedure, a standardised exchange of information may be submitted through the EU Customs Trader Portal; Great Britain traders keep evidence of movements in their commercial records rather than sending information sheets to HMRC.

If the goods were originally UK goods going out and coming back, a different relief may fit better – see our returned goods relief guide. For a longer walk-through focused on imported components, see this overview of inward processing relief for imported components.

Common mistakes

• Starting imports before the full authorisation is granted (apply at least a month ahead)
• Using authorisation by declaration for excluded goods or an eleventh import in the rolling year
• Missing the 30-day bill of discharge deadline, or skipping a nil BoD1
• Records that cannot link each import to its re-export and yield
• Assuming IP removes import VAT on EU repairs automatically – check the procedure code used

Related guides

• UK Freeports and Freeport customs sites explained

• Returned goods relief: re-importing goods without paying twice

• Outward processing in the UK: repairs and processing in the EU

Sources

• Apply to delay or pay less duty on goods you import to process or repair (GOV.UK)
• Moving processed or repaired goods into free circulation or re-exporting them (GOV.UK)
• Special procedure: inward processing (GOV.UK)
• Using inward processing to process or repair your goods (GOV.UK)
• Report goods exported to the EU using inward or outward processing (GOV.UK)

General information, not legal, tax or customs advice. Rules change; confirm current requirements on gov.uk or with a registered agent before you ship.