What Is Outward Processing Relief (OPR)?
Outward Processing Relief (OPR) is a UK customs procedure that can help businesses reduce customs duty when goods are temporarily exported overseas for processing, manufacturing or repair and subsequently re-imported into the UK.
Under the applicable rules, businesses may qualify for partial or full relief from customs duty on the re-imported products. The amount of relief depends on factors such as the type of processing, the value of the exported goods, the costs incurred overseas and the applicable customs rules.
How Does OPR Work?
The OPR process generally involves temporarily exporting goods, completing the required work overseas and re-importing the resulting products under the appropriate customs procedure.
Step 1: Export the Goods
The business arranges for eligible goods to be exported from the UK for an approved processing or repair operation.
The export declaration must contain the appropriate customs procedure information. Businesses should also maintain records identifying the goods, including descriptions, quantities, commodity codes and any relevant serial or batch numbers.
Step 2: Process or Repair the Goods Overseas
The goods are sent to an overseas supplier or service provider for the agreed work.
This may include manufacturing, machining, assembly, finishing, modification or repair, depending on the circumstances and the applicable customs rules.
Businesses should retain invoices, processing records and supporting documentation to demonstrate what work was undertaken.
Step 3: Re-Import the Goods into the UK
Once processing or repair is complete, the goods are returned to the UK.
The import declaration must correctly identify the goods and the applicable OPR arrangement. Supporting documents should establish the relationship between the exported goods and the products being re-imported.
Step 4: Calculate the Customs Duty Relief
The importer calculates the amount of duty payable under the relevant OPR rules.
Depending on the circumstances, customs duty may be calculated by reference to the value added through processing or the cost of repair rather than the full value of the returned goods.
Businesses must ensure that their calculations follow the applicable customs valuation and relief rules.
Businesses should not assume that OPR always means duty is payable exclusively on the processing fee. The applicable calculation must be established for the particular transaction.
What Are the Benefits of Outward Processing Relief?
Using OPR correctly can provide several commercial advantages for businesses involved in
1. Reduce Customs Duty Costs
2. Access Overseas Manufacturing Expertise
3. Reduce Equipment Repair Costs
4. Improve Supply Chain Flexibility
Who Can Use Outward Processing Relief?
OPR may be suitable for UK businesses that temporarily export eligible goods for overseas processing or repair, for example:
- Manufacturers: Businesses exporting components for machining, assembly or finishing.
- Engineering companies: Businesses sending industrial parts overseas for specialist treatment or modification.
- Electronics companies: Businesses arranging eligible repairs or technical processing abroad.
- Automotive businesses: Companies exporting components for specialist processing or repair.
- Equipment owners: Businesses sending eligible machinery or equipment overseas for repair.
- Textile and clothing businesses: Companies exporting fabric for processing into finished garments.
How to Apply for Outward Processing Relief in the UK?
Businesses should establish the appropriate authorisation before exporting goods for processing or repair, unless a specific simplified procedure applies.
The main steps are outlined below.
1. Check Your Eligibility
2. Obtain the Appropriate Authorisation
3. Prepare Your Export Declaration
4. Maintain Supporting Documentation
5. Complete the Re-Import Declaration
Does Outward Processing Relief Cover Import VAT?
Customs duty and import VAT are separate charges, and the rules governing their treatment under OPR are not identical.
Depending on the circumstances, import VAT may be calculated using a reduced taxable amount under the relevant rules. However, VAT relief is subject to specific conditions and should not be assumed to follow automatically from customs duty relief.
Businesses should review the VAT treatment of the transaction before exporting goods and again before re-importing them.
Common OPR Mistakes to Avoid
Although Outward Processing Relief can offer financial benefits, errors in the customs process can lead to incorrect duty calculations, delays or compliance problems.
Common mistakes include:
- Exporting goods without obtaining the required authorisation.
- Using an incorrect customs procedure code.
- Failing to retain sufficient evidence linking exported goods to returned products.
- Incorrectly calculating customs duty relief.
- Assuming that import VAT relief automatically applies.
- Failing to meet the applicable time limits.
- Not maintaining adequate processing, repair or shipping records.
Businesses should establish a clear process for managing OPR transactions. However, this can be complicated and companies should seek specialist customs advice where necessary. The team at Unipac Shipping are very skilled in application of OPR procedure and would be pleased to help with your particular case.
