Equivalence
Source: gov.uk (2025-04-30)

Information on equivalence.

Equivalence allows an importer to use identical free circulation goods instead of inward processing goods. This enables the importer to hold IP and free circulation goods in common stock (https://www.gov.uk/guidance/using-similar-goods-to-replace-customs-special-procedure-goods) without having to distinguish which specific goods have been entered into IP

An IP holder may ask to be granted equivalence separately for common stocking. If not granted ‘common stocking’ then imported IP goods must be held in a separate physical space from free circulation stock. In all circumstances, stock records must record quantity of imported IP goods and quantity of free circulation stock, with drawdown from imported IP stock first.

It will not matter whether the actual items processed and disposed of for IP purposes were entered to IP, all that will need to be checked is that quantity of goods entered to IP were satisfactorily disposed of within the agreed period for discharge.

If goods held in a common stock are destroyed by accident or there is an irretrievable loss, the authorisation holder may not be able to produce evidence of the actual quantity of IP goods lost or destroyed. In such cases, the percentage loss can be accepted based on the proportion of IP goods to equivalent free circulation stock that was held until the time the loss occurred.

If use of equivalence has been applied for, the details in the application must be sufficient for a comparison to be made between free circulation materials used and those materials that will be entered to IP. Regardless of the form of equivalence used the same basic criteria for determining if free circulation goods are equivalent to IP goods apply.

When an IP authorisation is issued it is granted for specific goods to be entered for a specified processing operation. If equivalence is approved, equivalent free circulation goods will be used in place of the goods authorised to be entered to IP. They must be subject to the same processing authorised under IP, by the authorisation holder.

How to determine whether goods are equivalent

To be equivalent the free circulation goods must:
- share the same first 8 digits of the commodity code
- be of the same commercial quality
- have the same technical characteristics
Equivalence should be sufficient to establish if goods are equivalent without the need for costly and time-consuming analysis of goods. However, trade or independent analysis should be provided for agricultural goods or bulk goods such as chemicals and oils. If there are any doubts that the goods are equivalent, samples for laboratory analysis should be taken. Further samples should be taken on a risk basis, at periodic intervals to confirm that the equivalence criteria continue to be met.

Commercial quality and technical characteristics

Goods may fall under the same 8-digit commodity code, but technical characteristics and commercial quality of those goods can vary considerably. These terms are not defined within the legislation, but samples, illustrations, technical descriptions, or analysis of goods may be useful to enable a comparison to be made between the goods to be entered to IP and the free circulation equivalent goods.

It is not possible to give guidance that will cover all cases but generally an indication that goods are not equivalent will be apparent if:
- any differentiation between goods is made by the applicant because of their non-UK customer requirements
- goods cannot be used for the same purpose
- goods are not directly interchangeable
It is important to ensure that equivalence is not used simply to export cheaper, inferior goods to a non-UK market to bring in more expensive, better-quality goods for sale on the UK market or vice versa.

The limitations on the use of equivalence

Equivalence can only be used with IP Full Authorisations. Equivalence is not permitted under authorisations by customs declaration.

Use of equivalence where processing is a usual form of handling must be refused regardless of the type of IP authorisation to be used. In such cases the person should consider using Customs Warehouse arrangements. This has the benefit of providing relief on goods that are subsequently re-exported outside the UK.

Equivalence cannot be used where goods are subject to Anti-dumping duty (ADD) and where goods would attract excise duty if released to free circulation”.

Some commodities like rice, sugar, wheat have special rules.

This page is very helpful to summarise: https://www.gov.uk/guidance/using-similar-goods-to-replace-customs-special-procedure-goods