Spotlight on: Returned Goods Relief

Did you know that if you have exported goods to a third country, you can re-import them to the UK using Returned Goods Relief (RGR)? HMRC guidance allows you to bring back your goods without paying duty or VAT, offering a significant financial advantage and potentially substantial financial savings provided that certain conditions have been met.

For instance, if your client realises they have ordered too much stock, the surplus can be returned to the UK without incurring duty or VAT upon re-import. This can be a substantial cost-saving measure for businesses managing their inventory and supply chains.

Key Conditions for Returned Goods Relief

To qualify for RGR, specific criteria must be met regarding the duty status of the goods at the time they were exported. At the time of the original export, the goods must have been in 'free circulation' in the UK. Free circulation means that they were produced/ manufactured in the UK and/or any goods imported from a third country had all relevant import Customs duties and VAT paid. ?

Additionally, RGR cannot be used when further work has been carried out on the goods in the overseas country, for example if the goods have been repaired, modified or processed then the return will not qualify for this relief procedure. ?If this is what you are doing, you should look at using Outward Processing Relief (OPR).

Time Limits

Time limits apply to how long the goods can be re-imported after the original export. Typically, goods must be re-imported within three years of their original export date, though this can vary depending on the type of goods and specific circumstances. ?In special circumstances, e.g., the return of goods on long term hire, loan, or lease, RGR can be requested for goods that were exported up to 10 years prior to the re-import.

Proportional Returns

If only a portion of the original export is returned, relief is still available under the same conditions. This is known as 'proportional returns '. For instance, if you exported 100 units of a product and only 50 are returned, you can still claim relief for those 50 units. This ensures flexibility for businesses managing partial returns of stock or goods.

Ownership and VAT Considerations

RGR waives the payment of both import duty and VAT on the re-import, but VAT can only be waived if the goods are being imported by the same party that exported them and ownership of the goods has remained or been transferred back to the importer. ?If the importer is not the same party that exported the goods, or does not own the goods being returned, then import VAT becomes due. ?UK exported goods being re-imported by a different company can still be eligible for a Customs duty waiver as long as the new importer has sufficient evidence of export. An INF3 Form (C1158) may be useful here to transfer the right to use RGR to a different UK company.

Claiming Relief

The company entering goods to RGR does not require prior Customs authorisation; Authorisation by Customs Declaration (ABD) applies. ?Also, there is no limit to the number of times a company can use RGR in a 12-month period (unlike other Customs procedures). ?You must ensure that you use the correct Customs procedure (6213) and then make careful selection of the Additional Code – it is the Additional Code that will indicate if VAT is to be paid or not, for example. ?

The process is straightforward and ensures you can easily access the benefits of RGR, but the importing party must hold sufficient evidence of the original export and quote the original export entry number (CDS – Movement Reference Number (MRN)) on the import declaration. ?The export entry must show that the goods were in free circulation under the standard export Customs procedure (1040) or as a temporary export procedure (2300). ?Other documentary evidence is required, such as the original export invoice, to ensure that at audit the returned goods are clearly the goods exported, and also a copy of the transport document/ proof of delivery (POD). ?When the re-importer is not the original exporter, confidentiality of prices, etc can be maintained by using the INF3 form.

Successful claims require meticulous record-keeping, and all records related to the transaction must be retained for a minimum of four years.

Conclusion

Utilising Returned Goods Relief can be a strategic financial decision for businesses involved in international trade. By adhering to the GOV.UK guidelines and ensuring all conditions and documentation requirements are met, you can re-import goods without incurring additional duty or VAT, thus optimising your operations and cost management.

For more detailed guidance, visit the GOV.UK website or consult with our Customs specialist at Strong & Herd LLP to ensure full compliance and to maximise the benefits of Returned Goods Relief.

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