Inward Processing Authorisation Holders Face Growing HMRC Risk
Andrew Thurston · Posted on: February 11th 2026 · read
We are seeing a sudden and concerning increase in enquiries from businesses holding Inward Processing (IP) authorisations following recent correspondence from HMRC.
The common theme?
HMRC challenges around the use of unauthorised commodity codes under existing IP approvals.
For many businesses, the consequences have been immediate and severe.
Unexpected Duty and VAT Assessments
Where HMRC considers that incorrect or unauthorised commodity codes have been used, they are issuing assessments for customs duty and import VAT. Critically, for many IP holders this liability becomes a direct and irrecoverable cost, particularly where the authorisation holder is not the owner of the imported goods.
The sudden incurrence of 20%+ non-refundable costs can create a significant financial shock. Once HMRC has raised the issue, customs legislation generally prevents retrospective fixes, meaning the debt will stand unless successfully challenged, something that in practice, is far from straightforward. In most cases, these costs cannot be passed on to the goods owner.
Why controls matter more than ever
Holding a customs authorisation is not a “set and forget” exercise. Robust internal controls are essential to managing the risks that come with special procedures such as inward processing.
That means ongoing investment in:
Trained and knowledgeable staff
Clear, documented processes
Regular compliance reviews
Continuous professional development
Without this, businesses leave themselves exposed and often without realising it.
The risk of revocation
Perhaps most worrying is HMRC’s increasing willingness to threaten revocation of IP authorisations where compliance failures are identified. The loss of an IPR authorisation can have a devastating impact on operations, disrupt supply chains, and create substantial additional costs.
In some cases, the debt alone could be enough to finish the business.
Being proactive is no longer optional, it is essential.
Common problem areas under Inward Processing
A compliance review will often highlight recurring weaknesses, including:
- Inaccurate or incomplete Bills of Discharge
- Late or missing submissions
- Incorrect commodity codes or procedure usage
- General misunderstandings of IPR obligations across teams
Left unaddressed, these issues can result in assessments, penalties, and ultimately revocation.
The question businesses need to ask themselves is simple: can we afford that risk?
A familiar story
During my time as an HMRC compliance officer, these issues were commonplace. Staff turnover, limited training, and a lack of management understanding often meant obligations under inward processing were not fully appreciated.
In almost every case, it was only when HMRC came knocking that businesses realised they had a problem, and by then, it was usually too late.
Proactive reviews
Any business holding a customs special procedure authorisation, whether inward processing, outward processing, temporary admission, or similar should take this as a prompt to review how those obligations are managed in practice.
A structured review of current customs compliance processes can quickly identify gaps in both knowledge and execution, allowing issues to be addressed before they escalate into assessments or enforcement action.
How MHA can help
If your business holds a customs authorisation and you have any concerns about how it is being operated, MHA’s customs team is available for an initial complimentary conversation.
We would welcome the opportunity to help you assess the strength of your current procedures and support you in mitigating the risk of assessments, penalties, or in the worst-case scenario, revocation.
