Case Study for the use of Customs Procedure Codes (CPC) 22 00 000 and 40 00 065

BY:

Bernard O'Connor

16 June 2021

Tools leaving the UK to be sharpened in an EU country and re-imported into the UK (not under warranty)

CPC 22 00 000 can be used to for duty free goods that are being temporarily exported outside the UK for process, repair, adaptation, reworking or making up. Use of this CPC constitutes a declaration that the goods are intended for temporary export, for the purpose of processing or treatment outside the UK, and for re-importation after completion of the process.

Note that this procedure can only be used 3 times in any 12 month period.

In our scenario, the tools are being temporarily exported outside the UK for a process (sharpening). They will then be re-imported to the UK after completion. The “Process”, sharpening in this case, would be subject to VAT on importation to the UK under the following guidelines.

CPC 40 00 065 should be used to re-import the duty free goods after processing, with VAT chargeable at importation (unless exemption is claimed) on the following value:

The freight charged for the transport to and from the processor’s premises (but not insurance)
The price charged for the process, repair or service, including any charge for parts and materials

To declare the amount of VAT payable on an import customs declaration, Tax type code B00 should be used, with code ’VAT’ entered after the VAT rate code in box 47. The calculated amount (in GBP) is to be entered in the Amount column to the right of the 'VAT' code.

HMRC advises that the use of CPC 40 00 065 constitutes a declaration that the goods:

• were previously exported outside the UK

• were exported using CPC 22 00 000 in box 37 of the export SAD

• were intended at the time of their export to be re-imported after completion of the treatment or process outside the UK

• have been repaired, processed, adapted, reworked or made up outside the UK

• ownership was not transferred to any other person at exportation or during the time they were outside the UK

To conclude, the tools which were temporarily exported for a process (sharpening) are subject to VAT at importation on the cost of the process.

VAT Exempt - Warranty Repairs

An example of VAT not being payable upon importation would be where the “tool” was under a warranty or was faulty and was being repaired as a part of this cover. VAT exemption would apply and therefore VAT would not be payable at re-importation.

To be clear, if the process were carried out free of charge, for example because the goods were covered by a warranty, a guarantee or a service agreement, VAT would not be payable at re-importation.

To claim VAT exemption under tax type code B00, code ’VAX’ should be entered after the VAT rate code in box 47 of the import declaration.

While you are here you may be interested in some Strong & Herd LLP training courses related to this

topic, we offer a wide range of high quality training courses to support all importing and exporting activities.

Temporary Imports & Exports Explained

Inward Processing Relief - IP Workshop

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