Outward Processing Relief: A Complete Guide for UK Business Owners

Do you send goods abroad for repair or processing? You could be paying more in customs duties than necessary.

With Outward Processing Relief (OPR), you can reduce import costs and boost your bottom line. Here’s everything you need to know about it.

What is Outward Processing Relief?

Outward Processing Relief is a customs procedure that allows UK businesses to temporarily export goods for reimportation whilst paying significantly reduced or no duties.

Businesses only pay duty on the “added value” created abroad. This is typically the cost of the processing or repair, rather than paying duty on the full value of the goods.

OPR is particularly valuable if you want to leverage specialist skills or lower production costs overseas, or if you have a repair centre located on the continent.

How does Outward Processing Relief work?

OPR prevents double taxation on goods that originate in the UK. It ensures you aren’t charged full duty on goods that are already in free circulation.

Whether relief is partial or total depends on your circumstances. If you repair goods for free under a warranty or because of a defect, you’ll probably qualify for total relief. If you benefit financially from the repair, however, you’ll need to pay duty and VAT on the cost.

Maintaining thorough documentation is essential for successful OPR claims. You must retain all paperwork in case of an HMRC enquiry, including export declarations, processing contracts, invoices showing processing costs, shipping documentation and duty relief calculations.​

If you're using simplified declarations to claim outward processing, you need to keep particularly detailed records. Records should clearly demonstrate the link between the exported goods and the re-imported processed products.​

What are some common uses for Outward Processing Relief?

OPR suits a wide range of business models. Here are its most common use cases:

• Final assembly. If you produce e-bike motors in the UK but assemble the bike in the Netherlands, you could apply OPR when importing the finished product.​

• Repair and restoration. When equipment or machinery requires specialist repair services only available abroad, OPR ensures you aren’t penalised with full import duties when the items return.​

• Finishing. If you send goods abroad for dyeing, plating, re-finishing or quality control testing, you can use OPR to access expertise and technology without prohibitive re-importation costs.

The four authorisation routes

HMRC offers four different authorisation routes for using OPR, each suited to various business circumstances.​

Full authorisation

Full authorisation is for regular users of outward processing. Once granted, authorisation can remain valid for several years.

This option requires you to complete an application online or submit a print-and-post form.​ You should apply at least 30 days before you start exporting goods.

Retrospective authorisation

Retrospective authorisation lets you apply for OPR after you've already exported the goods, but only in extraordinary circumstances.

HMRC will only grant this if you can demonstrate reasonable grounds that prevented you from obtaining prior authorisation. Unfortunately, a lack of knowledge doesn't qualify. HMRC also won’t grant retrospective authorisation if you've used the method within the previous three years.

Authorisation by declaration

Authorisation by declaration is a simple authorisation route for occasional users. This method is capped at 10 uses per year. The value of each consignment cannot exceed £500,000. You'll need to provide a security deposit to HMRC for the total duty and import VAT suspended.​

Northern Ireland and EU authorisation

If you send goods to Northern Ireland and the European Union for repair or processing, you can apply for a single authorisation rather than having one for each site.

How to apply for OPR

To qualify for OPR, you’ll need to be a financially solvent UK business with a good compliance history and the appropriate records.

You’ll need to complete form SP4 and provide details about the goods you plan to export, including commodity codes, descriptions and values. HMRC will assess whether your business need is genuine and whether you're following the outward processing procedure correctly.​

While freight forwarders and customs agents can’t apply for OPR authorisation on your behalf, they can assist with your application.

Alternatively, HMRC's Customs and International Trade helpline provides support for businesses using outward processing relief. You can reach advisers on 0300 322 9434 during general opening hours.

What does the Outward Processing Relief process look like?

The Outward Processing Relief process is straightforward once HMRC has approved your application.

When exporting goods, include your OPR authorisation number in your export declaration. If you plan to re-import goods in separate consignments, you'll need to complete an information sheet for each commodity code, including goods descriptions, quantities and identifying numbers to match your re-import with your export.​​

Before re-importing, it's your responsibility to calculate the duty relief you're claiming. You need to work out the "rate of yield," which essentially shows how many products result from the outward processing. HMRC requires you to show your working.​​

When re-importing your processed goods, include your OPR authorisation number on your import declaration and use the appropriate customs procedure code. You must provide documentation proving that the goods you're re-importing were exported using outward processing and that you've correctly calculated your duty relief claim.​

For goods repaired abroad, you'll pay duty at re-import on the amount you charge for repair or replacement, plus any inward shipping and insurance costs for returning the goods.​

What is the Standard Exchange System?

The Standard Exchange System (SES) is a variant of outward processing that deals with warranty replacements. It lets you import replacement UK goods before or after defective goods are temporarily exported for repair. HMRC will suspend duties on the replacement goods until the repaired goods return.​

You can only use SES for the repair of defective goods. Replacement products must have the same eight-digit commodity code, commercial quality and technical characteristics as the faulty goods.

Make the most of Outward Processing Relief with Pro Carrier

Outward Processing Relief is an excellent way for UK businesses to save on customs duties and boost their bottom lines. To be successful with OPR, you must ensure alignment with your business model and circumstances, choose the right type of authorisation, maintain meticulous records and accurately calculate your duty relief claims.

But OPR is just one way to reduce customs duties. By working with a freight forwarder, you can save time and money throughout the logistics process.

At Pro Carrier, for example, we work hard to find you the best possible rate with international carriers, work two weeks ahead of schedule to avoid customs delays and apply the correct HS codes to reduce duties.

For more information on reducing your customs liabilities or international shipping in general, speak to our experts today.