International trade regulations in the Automotive sector

How customs reliefs facilitate and support international trade

HM Revenue & Customs runs a number of duty relief schemes that could benefit automotive businesses. Duty relief procedures can:

  • provide relief from or delay payment of duty and/or VAT
  • allow reduced or nil rates of duty to be applied on goods that are permanently or temporarily imported under specific conditions and/or imported to a specific use
  • provide relief from duty and/or VAT for goods, temporarily exported and returned from outside the European Community (EC)

Duty relief schemes include but are not limited to:

  • Inward Processing (IP) - IP enables you to obtain duty relief on goods you import from outside the EC for processing and re-export from the EC. Processing can be anything from repacking or sorting goods to the most complicated manufacturing. See our guide on inward processing.
  • Outward Processing Relief (OPR) - OPR allows you to export Community goods, for processing or for repair. The processing work can range from the very simple through to involved manufacturing. On reimport to the EC you will only have to account for duty on the value added to the goods by the processing outside the EC. See our guide on outward processing relief (OPR).
  • Customs warehousing - this storage procedure allows payment of import duty and/or VAT to be delayed when non-Community goods are stored in a defined location or under an inventory system authorised as a Customs warehouse. See our guide on customs warehousing.
  • End-use relief - this scheme promotes particular EC industries and trades, subject to certain criteria by allowing a reduced or zero rate of customs duty on goods used for prescribed purposes. For information on how to apply for an authorisation to use this relief, see our guide on end-use relief.
  • Free zones - these are designated areas where payment of duty and VAT can be delayed provided imported goods are not released to free circulation or used or consumed within the free zone.

You can find out whether the goods you import are eligible for any of the above or other reliefs by referring to the relevant footnotes in the Tariff.

Customs Freight Simplified Procedures - while not defined as a relief, this optional electronic customs system - with its Simplified Declaration and Local Clearance Procedures can benefit businesses importing eligible goods from outside the European Community. See our guide on Customs Freight Simplified Procedures.

How the automotive sector can benefit from duty relief schemes

IP and OPR, for example, are useful to manufacturers who need to import components for final manufacturing or assembly in the UK or for businesses wishing to use EC-produced items to be manufactured elsewhere.

You could also use end-use relief to receive certain goods at a reduced or nil rate of duty provided they are imported from outside the EC, put them to a prescribed use under Customs control and within a specified time limit.

End-use is deemed to be completed for vehicle parts used for assembly when assembly of the vehicle is complete and the vehicle has left the assembly line.

End-use relief does not extend to VAT, excise duty or anti-dumping duty. Where VAT is due, it must be paid unless any separate VAT relief applies. See our guide on end-use relief.