HMRC has recently published recent guidance on how to operate a customs site within a Freeport. Here follows a summary of this guidance.
Using Customs sites
Freeport customs sites, or ‘free zones’, are secure customs zones where a business can import or export goods inside the UK’s land border, but where different import or export rules apply. If a customs site is used to import or export goods, the business may be able to:
- relieve duties and import taxes
- use simplified declaration processes
- choose which rate of customs duty to use if processing the goods changes their classification
What authorisation is required?
A business operating in the Freeport, can apply to use the Freeport customs special procedure, which is a single authorisation, combined with easier declaration requirements, to import goods that are not controlled, for:
- processing and export, or sale in the UK
- storage and export, or sale in the UK, where only the Freeport business authorisation holder can place goods in storage within the Freeport customs special procedure
If the Freeport customs special procedure is not applied for, an existing relevant customs special procedure the business is already authorised for, can be used, to:
- import goods for processing, then export, or sale in the UK
- import goods for storage, then export, or sale in the UK
- import excise goods for storage, then export, or sale in the UK
- sell, produce or process excise goods, with the relevant excise approval
It would appear that the Freeport single authorisation, covers a range of procedures, whereas in the absence of this, authorisations would be required for each individual procedure.
Controlled goods can be moved into, or stored in, a Freeport customs site, if an existing authorisation allows for this. If controlled goods are to be moved and stored and the business is not authorised to do so, firstname.lastname@example.org must be emailed to proceed.
If an existing customs special procedure is to be used, the usual conditions of this authorisation will apply, but the business must comply with the general Freeport customs site record keeping rules. HMRC must also be informed of any changes to an authorisation.
Applying to operate a Freeport customs site
Before applying, it is important to note that as an operator, a business must have an agreement in place with the operator of the wider Freeport. The applicant will need to:
- have an EORI number
- demonstrate it can meet the safety and security standards in relation to the Freeport customs site
- have details of the land being used for the Freeport customs site, which may include:
- the area of the site
- maps showing the site, entry and exit points
- demonstrate that the requirements to be designated as a Freeport customs site operator are met
If using transit, or temporary storage, there will be separate requirements.
Applications could be made from 9 September 2021, using the following form:
Operating Customs sites
To operate a Freeport customs site, the operator must meet the conditions of a ‘designation order’. The designation order sets out who the Freeport customs site operator is and the conditions to be complied with.
It must also be demonstrated to HMRC that the operator can comply with the conditions of a Freeport customs site designation and safety and security standards, by application to HMRC.
The conditions of the designation order to be complied with, may include:
- making sure the site is enclosed and that entry and exit is only allowed at identified points
- providing facilities, where records relating to the Freeport customs site can be examined
- maintaining electronic record keeping requirements
- providing information to authorised officials
- providing and maintaining, the necessary facilities for authorised officials including land and premises for the examination or search of goods
Making sure that no one operates on the site if the:
- appropriate notification has not been given
- activity is banned
- activity would breach a restriction imposed by HMRC
- making sure health and safety requirements imposed by a competent authority are met and that working conditions for authorised officials are safe
- making sure that any goods listed by HMRC as prohibited from a Freeport customs site, are not kept
- getting HMRC permission, before the construction of new buildings and making sure that any conditions of approval are followed
Telling HMRC of any:
- breaches of customs rules by anyone on site, or connected to the Freeport customs site
- material changes affecting your role as site operator
- failure to satisfy any requirements in the designation order, or your operator’s authorisation
- refusal of permission for any movement of goods out of the Freeport customs site, other than in circumstances permitted by Freeport customs site legislation
- complying with instructions given under Freeport legislation, by an authorised officer
HMRC must be notified of businesses that plan to carry out any industrial, commercial or service activity, in the Freeport customs site, before the activity has taken place.
Responsibility for security
The operator must have procedures in place, to protect the business and supply chain from risk and make sure procedures are robust and appropriate to the size and nature of the business. The operator must have evidence that it has:
- a safety and security risk assessment in place
- secured external boundaries, with documented procedures, to control access to the premises
- measures in place to inspect and protect cargo units
- measures to prevent unauthorised access to shipping areas, loading docks and cargo areas
- agreed appropriate safety and security measures with suppliers
- carried out security screening and procedures for prospective employees and contracted parties
- trained staff in the safety and security requirements
- contracts for temporary personnel
- details of who owns cargo units on the site
- site and personnel security requirements, in all outsourcing contracts, including cleaning, security and maintenance
- regularly checked and reviewed processes and keep records of this
The operator may also keep evidence of its safety and security certificate, from either an international convention, or an international standard of the International Organisation Standardisation.
A robust recruitment policy must also be in place, with pre-employment checks for all staff.
For each consignment, the operator must keep the following:
- air waybill number or shipping number
- the customs procedure the goods have been placed under
- the date and details of any customs formalities
- details of any electronic import or export declarations – the date and time the goods arrived at the business in the site
- unique commercial identification references
- number and type of packages
- the quantity and usual commercial or technical description of the goods
- the identification marks of the container, to identify the goods and weights
- registration number of vehicles carrying goods to the Freeport customs site
- the details of the business in the Freeport customs site, where goods have been received
The business receiving the goods, must notify the operator that they have arrived, where they are:
- brought into a Freeport customs site, to be declared by conduct to the Freeport customs special procedure
- under the Freeport customs special procedure, that have been transferred to another business, in the same Freeport customs site
The operator’s records must show that this notification has taken place and a copy of the information sent in the notification, must be kept, including the time and date it was received.
Goods must not be allowed to leave the Freeport customs site, unless the operator has been provided with a notification and evidence to show that the goods meet the following conditions:
They have been declared to:
- Inward Processing
- Authorised use
- Temporary Admission
- Customs warehousing and moved to a place outside of the Freeport customs site, where covered by the customs special procedure authorisation
They have been declared to the Freeport customs special procedure, but are to be moved directly to:
- a place from where they are exported
- a customs office for the purposes of discharging the Freeport customs special procedure
- a location in Northern Ireland
- an authorised business in another Freeport customs site
- they are domestic, including where HMRC has accepted a declaration, to say the goods have moved into free circulation, even if the goods are in the Freeport customs site
- they can be removed in accordance with an authorisation by HMRC and will be moved, in accordance with that authorisation
Evidence can include:
An original authenticated removal note, which will be one of the following:
- system generated release note/message
- release by another, approved electronic message format e.g. text message
- relevant customs paperwork, including proof of cleared declarations and customs special procedure authorisations
Relevant commercial documentation covering:
- the destination of the goods
- the reason for moving the goods outside the Freeport customs site
The notification must be made by a business authorised to operate in a Freeport customs site, or someone acting on its behalf. The records must include:
- notification and evidence provided by the operator
- time and date of the notification
- details of the business it relates to
If a third party provider is supplying customs services to the business, these details must also be included in the operator’s records.
Applying to use the Freeport customs site special procedure
A provisional agreement with the customs site operator at the location where the goods are intended to be stored and processed, must be in place. The applicant must have:
- EORI number
- Address, company incorporation number and contact details
- PAYE Scheme Reference, if relevant
- Unique Taxpayer Reference (UTR)
If undertaking storage activity, details of the goods to be imported, including commodity codes, description, quantities and values must be available. If undertaking processing activity, details of the goods to be imported and details of what is planned to happen to the goods, must be provided.
Guidance on applying will be available from 8 October 2021.
Once application has been made
Once HMRC has authorised, a letter setting out the authorisation conditions will be sent. The conditions will include:
- paying customs duty and other charges
- keeping detailed records
HMRC should be written to, if the authorisation is to be amended, renewed or cancelled, or if there has been a change to the business, which may impact the authorisation, such as, change of trading name, or being taken over by another business.
If authorised to store goods, there will be responsibility for:
- security and control of the goods, including stock records and accounting for shortages
- co-operating with HMRC, as supervisors of the authorisation
- allowing HMRC access to the premises, records and the goods, at any reasonable time
The goods can be kept in the customs site, for an unlimited time after HMRC authorise, however, if HMRC believe they might be a threat to humans, animals, plant health or the environment, instruction to move them out can be given.