UK free zones

This information sheet summarizes the key features of Free Zones in the UK.

The factors covered are:
1. Definition of Free Zones
2. UK Free Zones
3. Benefits of Free Zones
4. Placing goods in a Free Zone
5. Activities allowed in a Free Zone
6. Applying to operate a business in a Free Zone
7. Further information

1. DEFINITION OF FREE ZONES
A Free Zone is a designated area in which non-European Union goods are treated, for the purposes of import duties, as being outside the customs territory of the European Union (meaning that import duties are not payable until the goods are released for free circulation). 

 

 

Customs duty and import VAT are only payable if:
a) the goods leave the Free Zone and are placed into a European Union market, or
b) the goods are used or consumed within the Free Zone.

There are no special reliefs in Free Zones from other taxes, excise duties or local  authority rates. Any supplies of goods and services within the Free Zone are subject to normal VAT rules.

 

 

2. UK FREE ZONES
In the UK there are Free Zones in:
a) England:

  • Liverpool;
  • Port of Sheerness (Kent);
  • Port of Tilbury (Essex);
  • Southampton.

b) Scotland:

  • Prestwick Airport.

 

The key UK Government organisation responsible for Free Zones in the UK is HM Revenue & Customs.

For further information, please see:  www.hmrc.gov.uk

Telephone 0845 010 9000 (for callers within the UK)

or
+44 2920 501 261 (for callers from overseas).

 

3. BENEFITS OF FREE ZONES
In addition to the relief that is available throughout the UK on customs duties relating to the transhipment, handling and processing of goods destined for re-export, companies operating in Free Zones also receive the following benefits:

a) simplified customs procedures,
b) cash-flow benefits resulting from exemption of duty until the goods are
exported or released into free circulation,
c) additional security from the perimeter fence enclosing the Free Zone,
and
d) greater flexibility in determining the final destinations of goods (subject
to any quota restrictions).
4. PLACING GOODS IN A FREE ZONE
Goods that may be placed in a Free Zone include:
a) non-European Union goods,
b) European Union goods, and
c) goods in free circulation which are still under customs control (because,
for example, certain charges have not been paid, or proof of their arrival
or particular use is required).

 

 

5. ACTIVITIES ALLOWED IN A FREE ZONE
The following activities may take place in a Free Zone:

a) “Storage”. Goods accepted as “Free Zone goods” by the Free Zone Manager may be stored in the Free Zone for an unlimited time (specific time limits may, however, apply to certain Common Agricultural Policy goods).
b) “Usual forms of handling”. Simple activities may be carried out on the goods to:
– preserve them in good condition,
– improve their presentation or marketable quality, or
– prepare them for distribution or resale.
c) “Processing goods”. This includes any operation that changes the condition of the goods (such as manufacturing or assembly).
6. APPLYING TO OPERATE A BUSINESS IN A FREE ZONE
To run a business in a Free Zone, an operator needs prior authorisation from HM Revenue & Customs.

 

To apply for authorization, an operator should write to the appropriate HM Revenue & Customs office responsible for the Free Zone (see Appendix A) with the following information:
a) the nature of the activity that is planned,
b) a supporting letter from the Free Zone manager,
c) the name, address and VAT number of the company, including the correct legal entity,
d) the full names of the directors or partners of the company,
e) details of any associated businesses,
f) identity and details of any building in the Free Zone that will be used,
g) a description of the goods involved,
h) the origin of the goods and their customs status,
i) details of any handling or processing to be carried out,
j) methods of declaring goods to the Free Zone and removal from the Free Zone,
k) details of the stock records to be maintained, including any computer software, and
l) any other relevant information that is needed to ensure proper application of the arrangements.
If the application is accepted, the operator will receive a letter of authorization to proceed.

If goods are to be placed in the premises of an operator who is already authorized, the owner of the goods does not need to apply for a separate authorization and goods can be entered into the Free Zone under the existing approval.

 

7. FURTHER INFORMATION
This information sheet was updated in March 2010.
As information changes from time to time, please contact the organisations
listed or UK Trade & Investment to confirm any item that you intend to rely on.

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