A customs-specific look at HMRC’s latest Guidelines for Compliance

HMRC have just issued their latest update in their series of Guidelines for Compliance (GfC) in the form of Help with Freeports — GfC14.

This series, which we have commented on previously, lays out HMRC’s process expectations for businesses in various “novel, complex or widely misunderstood” areas and comes as part of HMRC’s increasing drive for strong tax governance within corporate taxpayers. By way of context, GfCs were originally introduced by HMRC due to feedback that their existing guidance required increased transparency and a reduction in uncertainty; traders wanted clarity and more support in achieving compliance.

Why fresh guidance matters for Freeports

So, when it comes to areas that are “novel, complex or widely misunderstood”, it should come as no surprise that a GfC on Freeports has now been published. Freeports as a topic is complex, with numerous rules relating to the different tax and customs options available at Freeport sites. Although Freeports have existed for many years, with seven originally in the UK, the legislation for which was not renewed in 2012. The current Freeports were introduced as part of the “levelling-up” agenda, by the previous government.

The purpose of Freeports was to act as an enterprise zone, attracting investment in deprived areas, by promoting jobs and opportunities for locals on the one hand and potential customs duty and import VAT suspension for business in “designated customs sites,” on the other. In addition, “tax sites” would give property tax relief on qualifying acquisitions of land and National Insurance benefits for employers.

So, what are customs sites within a Freezone? In short, these are secure locations where authorised businesses are able to store and process goods under the Freeport special customs procedure. A Freeport can extend to 45km beyond the port around which it is centred. It can include multiple ports and multiple customs sites and businesses operate in them like they would a normal warehouse or business premises, either by fully moving operations there, or by renting space within the site. Businesses are able to import goods for storage or processing and not pay any customs duty or import VAT, if the goods are subsequently re-exported from the UK. Alternatively, duty and import VAT are only paid when the goods are released onto the UK market, thereby creating a cashflow benefit for the business, because of the deferred tax point. The benefits are therefore akin to Inward Processing and Customs Warehousing.

The benefits and realities of customs sites

The reality of the Freeports initiative, is that take-up, particularly of customs sites within Freeports, has been minimal, with all the customs benefits already being available in varying forms, absent the need to relocate within the area of a Freeport. In terms of success stories, Liverpool City Region Freeport leads the way, with seven designated customs sites out of a total of eighteen across the UK. Others, however, have struggled to attract businesses to operate in the sites. This has led to the government taking the decision to be more flexible, thereby making customs sites within a Freeport an optional benefit, as opposed to being a requirement of Freeport status, which was the initial intention in the bid process.

Given the current government’s publication of the “UK Freeports Programme Report” from June 2025, it would seem that there is renewed enthusiasm to promote the benefits of Freeports, especially the customs sites. GfC14 may have been released in an attempt to do exactly that, but how?

First and foremost, GfC14 aims to clarify the benefits available. Simplified customs procedures giving a reduced administrative burden and quicker access to markets, as well as a suspension of customs duty and import VAT, are key benefits of operating in a customs site. In order to qualify to become a customs site in a Freeport, transparency from government in outlining the criteria needed for authorisation is essential and GfC14 attempts to do that. To make it easier for businesses, the guidance attempts to give support on best practice and how to reduce errors, by giving a practical steer on operations. In short, there are clear benefits in operating in a Freeport from a customs perspective, so why are more business not doing so?

The rhetoric is that Freeports were introduced to help build the foundations of regional and national growth for the long-term. However, there is general disappointment about the lack of real interest in them. Customs duty rates are lower than pre-Brexit days, special procedures are largely easier to manage than previously, with reduced guarantee requirements generally and Postponed VAT Accounting (PVA) being introduced for import VAT, which means there is no outlay of cash and no requirement to suspend it. Coupled with the need for a business to be physically located in a Freeport, it is not difficult to see why a business would choose not to operate in one.

Could GfC14 shift business perceptions of Freeports?

Clearly, there has to be a genuine attempt to promote Freeports and the publication of GfC14 reflects that. The UK Freeports Programme Report 2025 states a projection of “60,000 new and additional jobs and an additional 42,000 jobs across the supply chain” from the establishment of Freeports. With such claims, there has to be a focus on investment generation and therefore, the attempt to make things clearer and more transparent is welcomed, with the benefits and potential risks of operating in a Freeport outlined.

We will have to wait, however, to see if there is an uptick in applications. Initial thoughts on the guidance itself, are that it is very difficult to simplify a complex subject matter, although the language has undoubtedly been simplified. More to the point though, is that if businesses are already availing themselves of the customs benefits, when not based in a Freeport, why move to one?

How we can support your business

With GfC14 offering clearer guidance on Freeports, businesses exploring customs simplification may find renewed value in revisiting the Freeport model.

To discuss how GfC14 might influence your customs strategy or Freeport engagement, please contact your usual RSM adviser or a member of our customs and international trade team.

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