Inward Processing Relief (IPR) overview

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Inward Processing Relief (IPR) overview
  • What is IPR
  • Who can use IPR
  • How does IPR work?
  • Authorisations
  • Responsibility
  • HMRC correspondence address

2913/92/EEC ; 2454/93/EEC ; IPR10000; DeVoil Indirect Tax Service V3.334 and V17.136 (subscription sensitive); SI 1995/2518, reg 120(2)(a)(i); 2006/112/EC , Article 71;

Please note that the procedure outlined below ceased to be applicable when the Union Customs Code was introduced on the 1 May 2016. Please see the Union Customs Code - Inward Processing and other guidance notes in the Union Customs Code subtopic for more information on the current rules.

This guidance note provides an overview regarding how goods can be imported into the UK under IPR.

If the business is using an IPR simplified authorisation then it should read the IPR – simplified authorisation. guidance note. This note should be read in conjunction with the following guidance notes: Entering goods under IPR, IPR – transferring and disposing of goods, IPR – economic codes, requiring a guarantee, etc, IPR – guide to completing the forms and IPR – returns, claims and miscellaneous aspects.

What is IPR

IPR is intended to promote exports of goods from the EU and to assist processors resident within the EU customs territories compete on equal terms with non-EU traders.

IPR works in the following way:

A car shampoo manufacturer is based in the UK and one of the ingredients that it needs to produce the shampoo is a chemical only produced in America. The business therefore needs to import this chemical in order to incorporate it into the car shampoo product, which is then exported outside of the EU.

In this case, the chemical that was imported by the business does not actually stay within the EU as it was incorporated into a product that was exported. Therefore, as a result it would not be reasonable for the business to be required to pay customs duty on a product that was never really destined to stay in the EU.

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