What is a Freeport Customs Site
Freeport customs sites (also known as a free zone) are secure customs zones where you can import or export goods inside the UK’s land border, but where some different import or export rules apply.
If you’re a business that wants to move goods into or out of a Freeport customs site, you will need to apply to use the Freeport customs special procedure.
Who should apply to use Freeport customs site
Before you apply you should check if you need the Freeport customs special procedure or if you can use existing customs special procedures.
You should apply if you have a provisional agreement in place with the customs site operator at the location where you intend to store or process your goods.
What you’ll need to apply
You’ll need things like:
- – your Economic Operator Registration and Identification (EORI) number – if you do not already have an EORI number you must apply for one before filling out this form
- – your business information – for example, address, company registration number and contact details
- – PAYE Scheme Reference (if you have one)
- – UTR (Unique Taxpayer Reference)
If you undertake storage activity
You’ll also need details of the goods that you want to import, including commodity codes, descriptions, quantities and values.
If you undertake processing activity
You’ll also need:
- – details of the goods that you want to import, including commodity codes, descriptions, quantities and values
- – details of what you plan to do with the goods
You can apply to use the Freeport customs special procedure (a single authorisation combined with easier declaration requirements) to import goods that are not controlled for:
- – processing and then export or for sale in the UK
- – storage and then export or for sale in the UK – only the Freeport business authorisation holder can place goods in storage within the Freeport customs special procedure
If you do not apply to use the Freeport customs special procedure, you can choose to use an existing customs special procedure that you are already authorised for to:
- – import goods for processing and then export or for sale in the UK
- – import goods for storage and then export or for sale in the UK
- – import excise goods for storage and then export or for sale in the UK
- – sell, produce or process excise goods (if you have the relevant excise approval)
If you intend to use an existing customs special procedure, the usual conditions of your existing authorisation will apply but you’ll need to comply with the general Freeport customs site record-keeping rules.
You may also need to tell HMRC of any changes to your authorisation. For example, if the customs site is going to be a new processing or storage location.
VAT on supplies in the freeport customs site
You may be able to apply a zero rate of VAT on supplies within the customs site of either:
- – goods declared to the Freeport customs special procedure
- – services carried out on goods declared to the Freeport customs special procedure
When you issue a VAT invoice for zero-rated goods or services, it must include the reference ‘free zone’.
You cannot zero rate goods or services you sell to a business outside of a Freeport customs site.
If you are using an existing customs special procedure, the usual VAT rules for that procedure will apply.
When you can zero-rate supplies of goods
You can zero rate supplies of goods if:
- – they are declared to the Freeport customs special procedure
- – they are sold from one authorised Freeport business to another in the customs site
- – both Freeport businesses are registered for VAT with HMRC (unless they are exempt from registering for VAT and HMRC has approved this exemption)
This includes goods declared to the Freeport customs special procedure that have been combined with goods purchased in the UK as part of an authorised activity in the customs site.
When you can zero-rate supplies of services
You can zero rate supplies of services if the service:
- – is performed on or is in relation to goods declared to the Freeport customs special procedure
- – would be taxable, apart from under the free zone provisions
- – has been performed by an authorised person
The receiver of the service must tell the supplier in writing (for example, an email or letter) that the conditions for the zero rate are met and zero rate applies.
When the person receiving the goods may have to account for output tax
The receiver of zero-rated goods or services may need to account for output tax if you either:
- – do not make an onward supply of those goods within 3 months of declaring them to free circulation
- – breach the rules of the Freeport customs special procedure
The receiver will need to use the value of the goods or service to calculate how much output tax is due. They may also be able to claim back any input tax, in line with the usual VAT rules.
How can MCL Accountants help?
Contact MCL Accountants on 01702 593 029 if you have any queries on the Freeport customs sites or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.