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This publication is available at https://www.gov.uk/government/publications/notice-252-valuation-of-imported-goods-for-customs-purposes-vat-and-trade-statistics/notice-252-valuation-of-imported-goods-for-customs-purposes-vat-and-trade-statistics
This notice cancels and replaces Notice 252 (April 2016).
1.1 What this notice is about
There are a number of methods for establishing the value on which Customs Duty and import VAT is calculated. The same value is also used for trade statistics. This notice explains what the methods are and when they may be used.
This notice explains our view of the law, and nothing in it overrides the law.
1.2 Who should read this notice
It is mainly for importers and their clearing agents. The notice is written as though you are the importer unless otherwise stated.
Our notices and other information are available on our website at gov.uk
1.3 Why you need a value for Customs Duty
We often charge Customs Duty as a percentage of the value of your goods - we call this ‘ad valorem duty’. The amount of duty you must pay depends on the customs value of your goods. The rules for arriving at the customs value are based on the World Trade Organisation (WTO) Valuation Agreement (previously known as the ‘General Agreement on Tariffs and Trade (GATT) Agreement’).
1.4 What law covers customs valuation?
These rules are set out in EU regulations which are listed in section 26.
1.5 Import VAT
VAT due at import is treated like a Customs Duty. The amount of VAT you must pay depends on the value of the goods. The rules for arriving at this value are set out in the VAT Act 1994, section 21.
1.6 What are trade statistics?
We have to collect and compile trade statistics for UK (the balance of payments) and EU purposes. You must always declare a value for trade statistics on the import entry or removal document from customs warehousing. This value must be declared in the value for duty box whether or not ad valorem duty is to be paid or the goods are to be entered to a customs warehouse.
2. Customs Duty
2.1 Where can I find out if I have to pay ‘ad valorem Customs Duty’?
In the Customs Tariff. This lists all the Customs Duty rates, commodity codes and procedures relating to imported goods. You can ask for details from our Helpline.
2.2 How do I arrive at the value for Customs Duty?
You do this by using one of 6 ways or ‘methods’. You must try Method 1 before going on to Method 2 and so on. We may ask you to explain why an earlier Method cannot be used. The only exception to the order of trying the methods is that you may try Method 5 before Method 4 if you wish. You can use the Simplified Procedure Values (SPVs) (for goods imported on consignment) or Standard Import Values (SIVs) systems (see sections 9 and 10) if you import fresh fruit and vegetables.
Sections 3 to 8 explain the 6 methods. However, the normal Method of valuation is Method 1 (the transaction value Method). You must use this Method wherever possible and in fact it is used for over 90% of importations liable to ad valorem Customs Duty.
2.3 Must I produce evidence to support the value for Customs Duty?
Yes. The evidence for each method is described in the relevant sections. You must produce any documents and information about an importation which one of our officers requires. You may also be required to allow officers to inspect or take extracts from any relevant document.
2.4 How long must I keep customs records?
You must keep them for a period of at least 4 years.
2.5 What if I cannot arrive at the value for Customs Duty?
You can ask for release of your goods by paying the undisputed charges outright and securing the balance by cash or cheque - we call this a deposit. When the value is agreed you may be asked to pay more duty or you may get a refund - we call this adjusting the deposit. If the deposit equals the amount of duty due you’ll be told - we call this bringing the deposit to account. As an alternative to a cash deposit, you may be able to use a guarantee, underwritten by a bank. The Helpline will be able to advise you further.
2.6 What do I do if I disagree with a customs decision?
If you do not agree with the decision issued to you, there are 2 options available:
- if you want a review you should write back to the decision maker within 30 days of the date of letter, giving your reasons why you do not agree with their decision
- appeal direct to the tribunal who are independent of HMRC
If you choose to have your case reviewed you’ll still be able to appeal to the tribunal if you disagree with the outcome.
More information about reviews and appeals is in leaflet HMRC1: HM Revenue and Customs decisions - what to do if you disagree. If you need a paper copy telephone the Self Assessment forms ordering helpline.
3. Method 1
3.1 What is Method 1?
It is the first method you must try. It is called the ‘transaction value’.
It is the normal method of valuation which applies to over 90% of importations liable to ad valorem Customs Duty.
3.2 What is meant by ‘transaction value’?
This is the price paid or payable by the buyer to the seller for the goods when sold for export to the EU adjusted in accordance with specific rules explained in detail in the following paragraphs.
This may also cover situations where goods are imported from a processor. The ‘transaction value’ may be ‘built up’ or ‘constructed’ by reference to the cost of processing plus any items to be added in accordance with paragraph 3.15, particularly sub-paragraph (d). Such items are commonly referred to as ‘assists’.
3.3 What if there is no sale?
This rules out Method 1. You must try Method 2. Ignore the rest of this section and go direct to section 4.
Examples of situations where there is no sale are given in section 27.
3.4 How do I arrive at the customs value?
You base it on the price actually paid or payable by the buyer to the seller for the goods. This means the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. It includes all payments made or to be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller. Thus periodic payments (such as monthly, quarterly, annually) or ‘one off’ payments by the buyer to the seller for the imported goods must be taken into account (for example, tooling charges, engineering fees, development costs).
The buyer of the imported goods need not necessarily be established in the country of importation.
3.5 What happens if there is an earlier sale where the imported goods have been sold more than once prior to entry to free circulation?
Where goods are sold only once, the fact that they are declared for free circulation in the community can be taken as confirming that the goods were ‘sold for export to the community’. Where the goods are sold to one or more subsequent buyers before entry into free circulation, this also applies to the last sale in the commercial chain prior to the introduction of the goods into the customs territory of the community.
3.6 What other information and documentary evidence is required?
From 1 May 2016 the earlier sales provisions will no longer apply. However, under the transitional arrangement (Article 347 of Commission Implementing Regulation (EU) 2447/2015) where an earlier sale has taken place involving the imported goods, you may declare the earlier sale as the basis for the customs value until 31 December 2017. The use of the transitional arrangement is restricted to contracts concluded prior to 18 January 2016.
Note: an earlier sale may not be used as the basis for import VAT where the import declaration is made in the name of a final consumer or retail customer.
Remember you can only use an earlier sale where it can be demonstrated that there are specific and relevant circumstances which led to export of the goods to the customs territory of the community. Ways in which you can do this include the following:
- the goods are manufactured according to EU specifications, or are identified (according to, for example, the marks they bear) as having no other use or destination
- the goods in question were manufactured or produced specifically for a buyer in the EU
- specific goods are ordered from an intermediary who sources the goods from a manufacturer and the goods are shipped directly to the UK or EU from that manufacturer
Examples illustrating case situations are given in section 28.
The term ‘earlier sale’ may also apply to ‘built up’ or ‘constructed’ values (see paragraph 3.2).
The person making the customs entry must be in possession of all the facts relating to the sale upon which the declared customs value is based. This includes having access to the relevant accounting records kept in third countries in order to provide documentary evidence of settlement between the relevant buyer and seller to our satisfaction.
Also, having declared a sale, which is accepted by us as the basis for the transaction value, you cannot subsequently amend the original declaration to another sale if the goods have been released into free circulation.
3.7 What evidence of the price paid or payable must I produce?
A copy of the seller’s invoice or other document against which payment will be made. This will include telex or similar messages used instead of invoices (see also paragraph 2.3).
3.8 What if customs has doubts about the transaction value?
Where we have doubts that the declared transaction value represents the total amount paid or payable, we will ask you for more information. If those doubts continue we shall notify you (in writing if you request) of the grounds for those doubts before making a final decision about the acceptability of the declared value. You’ll be given a reasonable opportunity to respond. Then we will make a final decision and notify you of it in writing (see paragraph 2.6 if you disagree with a customs decision).
3.9 What if the sale is subject to any restrictions?
If the sale is subject to conditions which restrict your freedom to dispose of or sell the goods as you wish you may not be able to use Method 1 (see section 29).
3.10 What if I am related to the seller of the goods?
The fact that you are related to the seller of the goods does not mean that Method 1 cannot be used. The price paid or payable is still acceptable unless as a result of the relationship you get a reduced price (see section 30).
3.11 What does ‘related’ to the seller mean?
Persons (natural or legal) are related if:
- they are officers or directors of one another’s businesses
- they are legally recognised partners in business
- they are employer and employee
- any person directly or indirectly owns, controls or holds 5% or more of the outstanding voting stock or shares of both of them
- one of them directly or indirectly controls the other
- both of them are directly or indirectly controlled by a third person
- together they directly or indirectly control a third person
- they are members of the same family (see section 31)
But if you act as the seller’s agent, distributor or concessionaire you are related only if one of the above categories also applies.
3.12 If I’m an intermediary (such as a selling agent) or branch office can I use Method 1?
You may be able to use Method 1. Section 32 for selling agents or 33 for branch offices give further information.
3.13 Does it matter if I pay the seller direct?
No. You can pay a third party if the seller says so.
3.14 Does it matter if I pay in cash?
No. You can also pay by letters of credit or negotiable instrument.
3.15 What items must I add to the price paid or payable?
You must add the following to the price you pay (unless they are already included):
(a) Delivery costs. The costs of transport, insurance, loading or handling connected with delivering the goods to the UK or EU border must be included. Section 17 gives further details.
(b) Commissions. Certain payments of commission and brokerage, including selling commission, must be included. Section 32 gives more details about selling agents.
But you can exclude buying commission if it is shown separately from the price paid or payable for the goods (see paragraph 3.16(f) and section 34).
(c) Royalties and licence fees. You must include these payments when they relate to the imported goods and are paid by you as a condition of the sale to you of those goods.
You can find further information in section 35.
(d) Goods and services provided free of charge or at reduced cost by the buyer. If you provide, directly or indirectly, any of the following, you must include in the customs value any part of the cost or value not included in the price charged to you by the seller:
(i) materials, components, parts and similar items incorporated in the imported goods including price tags, kimball tags, labels
(ii) tools, dies, moulds and similar items used in producing the imported goods, for example, tooling charges - there are various ways of apportioning these charges
(iii) materials consumed in producing the imported goods, for example, abrasives, lubricants, catalysts, reagents etc which are used up in the manufacture of the goods but are not incorporated in them
(iv) engineering, development, artwork, design work and plans and sketches carried out outside the UK and EU and necessary for producing the imported goods - the cost of research and preliminary design sketches is not to be included
If you make any payments (periodically or ‘one off’) to the seller for any of the above goods and services, you must include the amounts in the customs value (see paragraph 3.4).
(e) Containers and packing, include the cost of:
- containers which are treated for customs purposes as being one with the goods being valued (that is not freight containers the hire-cost of which forms part of the transport costs)
- packing whether for labour or materials
Where containers are for repeated use, for example, reusable bottles, you can spread their cost over the expected number of imports. If a number of the containers may not be re-exported, this must be allowed for.
(f) Proceeds of resale. If you are to share with the seller (if directly or indirectly) the profit on resale, use or disposal of the imported goods you must add the seller’s share to the price paid (but see paragraph 3.16(d) as regards dividends). For example, if the seller is to have 30% of the profit which you receive, this is to be added to the price paid or payable. If at the time of importation the amount of profit is not known, you must request release of the goods against a deposit or guarantee (see paragraph 2.5).
(g) Export Duty and taxes paid in the country of origin or export. When these taxes are incurred by the buyer they are dutiable. However, if you benefit from tax relief or repayment of these taxes they may be left out of the customs value.
3.16 Can I leave out any items from the customs value?
Yes. The following items may be left out of the customs value:
(a) Delivery costs in the EU. If the seller’s or carrier’s charge covers delivery beyond the EU border you may deduct the additional charges for such delivery, providing they are shown separately from the price paid or payable for the goods. Section 17 gives more details.
(b) EU duties or taxes. You can deduct from the price you pay any included Customs Duty or other taxes which are payable in the EU because of the importation or sale of the goods.
To find the amount of duty included in the invoice price, use the formula:
Duty inclusive invoice price × duty rate ÷ (100 + duty rate)
For example, if the duty inclusive invoice price is £1,100 and the rate of duty is 10% the duty included in that invoice price is:
£1,100 × 10 ÷ (100 + 10) = £11,000 ÷ 110 = £100
Therefore the included duty is £100.
Note: the included duty is the last item to be deducted.
(c) Discounts. These can only be left out where they relate to the imported goods being valued and there is a valid contractual entitlement to the discount at the material time for valuation. Discounts (such as contingency or retroactive discounts) related to previous importations cannot be claimed in full on the current importation.
(i) Quantity or trade discounts. You can leave out these discounts where earned. In other words the price paid or payable net of these discounts is acceptable. If you are related to the seller the discounts will also be allowed if that relationship has not affected the price of the goods (see paragraph 30.1).
(ii) Cash and early settlement discounts. You can also leave out these discounts on the following basis:
- when the payment reflecting the discount has been made at the time of entry to free circulation
- if the payment has not been made at the time of entry to free circulation, it will be allowed at the level declared provided it is a discount generally accepted within the trade sector concerned
- if the discount is higher than is generally accepted within the trade sector concerned it will only be accepted if you can demonstrate, where required, that the goods are actually sold at the price declared as the price actually paid or payable and the discount is still available at the time of entry to free circulation
Note: if you never take advantage of a cash discount and always pay the gross contract price for the goods, the discount may become liable for inclusion in the customs value at the time of entry to free circulation. For further information you should contact our Helpline.
(d) Dividends. You can leave out dividend payments you make to the seller.
(e) Marketing activities related to the imported goods. You are not required to include in the customs value the cost of the following activities which you carry out at your own expense:
- guarantee or warranty services
In addition any payments that you make towards general marketing support which are not related to imported goods, should not be included.
Note: the cost of marketing activities borne by the seller are to be included in the customs value even if they are charged separately from the invoice price for the goods.
(f) Buying commission. You may leave out fees or brokerage paid to your agent for representing you outside the EU in buying imported goods, providing the commission is shown separately from the price paid or payable for the goods.
See section 34 for further details.
Note: buying commission is only to be included in the value for VAT where the buyer in the sale on which the customs value is based is not registered for UK VAT (see paragraph 24.2 for further details).
(g) Export quota and licence payments. You may leave out payments for buying export quotas and licences.
But you must include payments for certificates of authenticity for meat.
See section 36 for further details.
(h) Interest charges. These may be left out if they are payable under a financing arrangement for buying the imported goods, providing the charges are shown separately from the price paid or payable for the goods.
See section 37 for further details.
(i) Rights of reproduction. Payments for these rights may be left out if they are shown separately from the price paid or payable for the goods.
(j) Post-importation work. You may leave out charges for:
- construction work
- giving technical help
for goods such as industrial plant, machinery or heavy equipment. The work may be carried out before or after importation so long as it relates to the imported goods and the charge is shown separately from the price paid or payable for the goods.
(k) Management fees. You can leave out management fees that you pay to the seller. This would include general service fees for administration, marketing, accounting, and so on, that are not related to the imported goods.
Note: you may need to produce evidence to support any claim to leave any of the items mentioned in this paragraph out of the customs value.
3.17 What can I do if, at the time of entry, I cannot arrive at a value for an item that:
(a) I must add to the price paid or payable?
(b) I may leave out of the customs value?
You can ask us to agree to a simplified procedure for arriving at an appropriate amount to add or exclude at the time of entry. This could involve the use of average values or a percentage addition or deduction and be subject to periodic reviews.
Send your request, saying why you need to use a simplified procedure together with details of how the amounts will be determined, to :
HMRC Customs and International Trade Valuation Unit of Expertise
ISBC C&A North and East Midlands
Peter Bennett House
Note: these contact details are for valuation simplification requests only. For general enquiries, you should contact imports and exports: general enquiries.
4. Method 2
4.1 What is Method 2?
It is the second Method you must try. It is based on the customs value of identical goods exported to the EU at or about the same time as the goods to be valued.
4.2 What is meant by ‘identical goods’?
These are goods produced in the same country as those being valued.
They must also be the same in all respects, such as physical characteristics, quality and reputation. Minor differences in appearance do not matter. If the producer of the Method 2 goods does not produce Method 1 goods, another producer’s goods may be used for comparison.
4.3 What if there are no identical goods?
This rules out Method 2. You must try Method 3. Ignore the rest of this section and go direct to section 5.
4.4 How do I arrive at the customs value?
You base it on a customs value of identical goods already accepted by EU customs under Method 1. Where there is a sale at the same commercial level and in the same quantity this must be used.
If more than one value is available use the lowest.
4.5 What if there are no sales at the same level or in the same quantity?
You may use sales at a different commercial level or in different quantities. But when arriving at the customs value you must take into account any effect these differences have on the price. There are examples in section 38.
4.6 Are there any other differences I must take into account?
Yes. You must take account of differences between the costs of delivering the identical goods and delivering the goods to be valued.
4.7 What evidence must I produce?
A copy of, or the necessary data to enable us to trace, an import entry (with supporting documents) for identical goods where Method 1 has been accepted by us or an EU customs administration. This entry must relate to identical goods exported at or about the same time as the goods to be valued. This is to ensure that the goods to be valued and the identical imported goods will have been exported within a timescale in which the price of the goods would not have changed.
4.8 What if identical goods are to be valued under both Method 1 and Method 2?
If some of the goods are sent free of charge, (see section 12) and they are entered on the same import entry, the evidence provided with that entry can be used to establish both the customs values.
We may need a copy of the producer’s price list where differences for level or quantity have to be taken into account (see paragraph 4.5 and section 38).
5. Method 3
5.1 What is Method 3?
It is the third Method you must try. It is based on the customs value of similar goods exported to the EU at or about the same time as the goods to be valued.
5.2 What is meant by ‘similar goods’?
These are goods which differ in some respects from the goods being valued but they:
- are produced in the same country
- can carry out the same tasks
- are commercially interchangeable
Where similar goods are not made by the producer of the goods to be valued, you can use similar goods produced by a different person.
5.3 What if there are no similar goods?
This rules out Method 3. You now have a choice to either try Method 4 (explained in section 6) or Method 5 (explained in section 7).
5.4 What are the conditions for using Method 3?
The conditions are the same as for Method 2, see section 4.
6. Method 4
6.1 What is Method 4?
It is the fourth Method you can try. It is based on the selling price of the goods in the EU.
Remember that Method 5 can be tried before Method 4 if you wish.
6.2 How do I arrive at the customs value?
The customs value is based on the price of each item (unit price) at which:
- the imported goods
- identical imported goods (see paragraph 4.2)
- similar imported goods (see paragraph 5.2)
are sold in the EU in the condition as imported to customers unrelated to the seller. The unit price must relate to sales in the greatest aggregate quantity (see paragraph 6.6) at or about the time of the importation of the goods to be valued.
You must be able to produce details of the sales in the greatest aggregate quantity at the time of entry into free circulation.
In the UK this is known as ‘Method 4(a)’.
6.3 What if there is no sale at or about the time of importation?
You can base the customs value on the unit price of the actual sales of the imported goods that take place up to 90 days after importation.
As you cannot establish the customs value until the goods have been sold you must request release against a deposit (see paragraph 2.5).
In the UK this is known as ‘Method 4(b)’.
6.4 What if the goods are not sold in the EU in the condition as imported?
If you want to, you can base the customs value on the price at which the goods are sold after processing.
But you cannot do this if the goods:
- lose their identity (unless you can accurately and easily establish the value added by the processing)
- keep their identity but form a minor part of the goods sold
6.5 What if there are no sales to unrelated persons in the EU?
This rules out Method 4. You must try Method 5 (explained in section 7) if you’ve not already considered it. Otherwise go to section 8.
6.6 How do I arrive at the ‘sale in the greatest aggregate quantity’?
You add together the number of items sold at each price. The largest number of items sold at one price is the greatest aggregate quantity. See section 39 for examples.
6.7 What deductions must I make from the unit price?
You must deduct the following:
- either the commissions usually paid or agreed to be paid or the addition usually made for profit and general expenses in connection with sales in the EU of imported goods of the same class or kind
- the usual costs of transport, insurance and associated costs incurred in the UK and EU
- UK and EU customs duties and internal taxes payable in the country of importation
Also if the goods are sold after processing (see paragraph 6.4) deduct the value added by the processing carried out in the UK and EU.
6.8 Can I deduct my actual profit and general expenses?
Yes unless your figures are out of line with those usual for sales in the EoUf imported goods of the same class or kind.
6.9 What if customs challenge the deduction I have made?
We will produce other relevant information relating to additions for profit and general expenses made by importers of goods identical or similar to those to be valued. Therefore you should have available information to show that the deduction you’ve made is ‘usual’ by comparison with importers within your trade sector. Because this is a complex subject we recommend that you contact the Helpline to agree a deduction before you begin importing the goods concerned.
6.10 What is meant by ‘goods of the same class or kind’?
This term means goods which fall within a group or range of goods produced by a particular industry or sector of industry. It includes identical (see paragraph 4.2) and similar (see paragraph 5.2) goods. The goods need not have been imported from the same country as the goods being valued.
6.11 What evidence must I produce?
Method 4(a) - you must produce with the import entry one of the following showing the unit price in the greatest aggregate quantity:
- a sales invoice
- a price list current at the time of importation (for importations of sheepmeat carcasses from Australia and New Zealand see section 40)
- other evidence as agreed with us
Unless an overall percentage deduction has been agreed with us, we also need details of the actual deductions claimed.
Method 4(b) - at the time of importation. You must give a reasonable estimate of the final sales value for deposit purposes (see paragraph 2.5). This estimate must be supported by a pro-forma invoice, statement of value or other evidence. For importations of fresh fruit and vegetables and cut flowers see section 41 - Adjusting the deposit. You do not have to wait until all the goods are sold to establish the Customs value. Once you’ve sold enough to arrive at the unit price you must send copies of the sales invoices and a copy of your calculations to the National Import Duty Adjustment Centre (NIDAC). Unless an overall percentage deduction has been agreed with us, we will also need details of the actual deductions claimed. Duty will either be taken to account, refunded or called for (see paragraph 2.5).
In the fresh fruit and vegetable and cut flowers trade the account sales procedure may be used as a basis for arriving at the duty payable (see section 41 for more information).
7. Method 5
7.1 What is Method 5?
It is the fifth Method you can try. It is based on the costs of production of the goods. Usually it can only be used where the importer and supplier are related (see paragraph 3.10).
Remember you can try this Method before Method 4 if you wish.
7.2 How do I arrive at the customs value?
The customs value is a built-up value. It is based on the sum of the following:
- the cost or value of materials and fabrication or other processing used in producing the imported goods including:
- the items detailed in paragraph 3.15(d) if supplied by the buyer, directly or indirectly, even if the work listed in paragraph 3.15(d)(iv) is carried out in the EU you must include the value of the work in the customs value if you charge the producer of the goods to be valued for that work
- containers and packing (see paragraph 3.15(e))
- an amount for the producer’s profit and general expense
- the cost of transport, insurance and loading or handling connected with delivering the goods to the EU border
7.3 What evidence must I produce?
You must be able to get information about the cost or value of the items in paragraph 7.2. This information must be based on the producer’s commercial accounts. These accounts must follow the general principles of accounting, which apply in the country where the goods are produced.
7.4 What other evidence is required?
You must also be able to get information about the producer’s profit and general expenses. The amount to be added must be in line with the usual figures for profit and general expenses for producers in the country of exportation of the goods:
- of the same class or kind (see paragraph 6.10)
- for export to the EU
7.5 What if customs challenge the producer’s figures for profit and general expenses?
We will produce other relevant information relating to figures for profit and general expenses reflected in sales by other producers who export to the EU. Such figures will relate to producers of identical or similar goods in the same country of export as the goods to be valued.
7.6 What if I cannot get this information?
This rules out Method 5. If you’ve already unsuccessfully tried Method 4 (explained in section 6) you must now use Method 6 (explained in section 8).
7.7 Can I get help to work out this Method?
Yes, but we know from experience that this Method is difficult and therefore is rarely used. For further advice you should contact the Helpline.
8. Method 6
8.1 What is Method 6?
It is the final Method and is called the ‘fall-back’ Method.
8.2 How do I arrive at the customs value?
You must arrive at the customs value by using reasonable means consistent with the WTO Valuation principles.
You do this where possible by adapting Methods 1 to 5 flexibly to fit unusual circumstances:
Methods 2 or 3. The customs value could be based on the transaction value of identical or similar imported goods produced in a country other than the country of exportation of the goods being valued.
Method 4(b). The 90 days limit for sales could be extended.
The customs value could be based on the price that would have been paid for the goods if they had been purchased (perhaps by reference to the export price list for sales to the EU issued by the supplier). This approach would be consistent with WTO valuation principles.
8.3 What evidence must I produce?
This depends on which Method is being flexibly used. For further advice you should contact the Helpline.
9.1 What are SPVs?
They are customs values derived from prices realised on sales in specified marketing centres in the EU. A variety of deductions are made from these prices to arrive at an average sterling value per 100 kilogram net for each product covered by the scheme.
9.2 What fruit and vegetables does the scheme cover?
A list is given in section 42. Importers connected to Customs Handling of Import and Export Freight (CHIEF) can obtain these details from the relevant data files.
9.3 When can I use SPVs?
You can only use the SPV scheme for whole fruit and vegetable produce, of a single kind, imported on a consignment basis.
Excluded from the scheme are fruit or vegetable products that have undergone a cut and dicing process prior to importation.
You cannot use the SPV system if there is a transaction value. The goods must be valued using Method 1.
9.4 Can I change my mind about using the SPV scheme during a calendar year?
Yes, there are no restrictions on changing between SPVs and other valuation Methods during that year. Remember that if there is a transaction value, Method 1 must always be used.
Note: once the goods have been entered to SPVs you can never have the entry amended to, for example, Method 4(b) nor may goods be entered against security pending a choice between SPVs and any other Method.
9.5 How often do the SPVs change?
Fortnightly, starting midnight Thursday/Friday.
9.6 How can I find out the current SPVs?
A list of the values is available on the CHIEF noticeboard. The Fresh Produce Consortium (UK) is also told the values for the benefit of their members.
The SPV to be used is the value applying when the import entry is accepted by us.
Note: when a SPV rate is not available to use as the basis of value you must use Method 4(b) to value goods imported on consignment.
9.7 Can I get a refund of duty on goods which are received in a state unfit for human consumption or have to be destroyed?
Yes, if you can show that 5% or more of the consignment was unfit for human consumption (before entry into free circulation). Duty will be refunded on that part of the consignment which is unfit for human consumption. Section 8 of Notice 199: imported goods - customs procedures and customs debt, gives you advice on repayments.
9.8 What if the goods are received in a damaged state?
If you can show that the damage occurred before entry into free circulation and the value of the consignment has decreased by at least 20% the SPV rate will be apportioned accordingly.
If the value of the consignment has decreased by 40%, the customs value will be based on 60% of the SPV.
9.9 What evidence must I produce?
You must show by what percentage the goods were damaged or unfit for human consumption before they were released from our control. This must be done by producing a statement from:
- our officer who examined the goods
- the Port Health Official
- an independent expert such as an insurance assessor or a surveyor who is acceptable to us
10. Entry price system - SIVs
10.1 What is the entry price system?
The entry price system applies to the fruit and vegetables. Further details can be found in the Customs Tariff, Volume 2, section 11.
For each product covered by the system the tariff indicates a scale of entry prices per 100 kilogram net. At the highest point on the scale the tariff indicates an ad valorem rate of duty only. As you proceed down the scale specific charges are introduced. Thus the lowest entry price generates the highest specific charge in addition to the ad valorem duty.
11. Frozen meats in round sets
11.1 What is frozen meat in round sets?
Frozen meat is often imported in what is commercially described as ‘frozen round sets’. These consist of several different cuts of meat invoiced at a unit price per ton. The cuts differ in value, but this may not be shown on the invoice.
11.2 Which valuation Method do I use?
You must try Method 1, based on the alternatives outlined in section 43.
11.3 What if there is no price paid or payable?
For further advice you should contact the helpline if you are unable to use Method 1.
12. Valuing free of charge goods
12.1 Can I use Method 1?
Not normally, because there is no price paid or payable by you to the supplier.
But you may be able to use Method 1 where:
- the goods have been the subject of an earlier sale (perhaps to the supplier)
- you are importing the goods pre-sold and you can produce evidence of that sale
See paragraph 19. 4 about completing and signing valuation declarations.
12.2 If I cannot use Method 1, how else can I arrive at the customs value?
You can try:
- Methods 2 or 3 (see sections 4 or 5) if you import or have knowledge of imports of identical or similar goods under Method 1
- Method 4 (see section 6) if you sell the goods or identical or similar goods to unrelated customers in the EU
- Method 5 (see section 7) if you can get the detailed costings
12.3 What if I cannot use any of these Methods?
You must use Method 6 (see section 8). The customs value can be based, for example, on the price you would have paid the supplier if you had bought the goods. You must add or leave out the items detailed in paragraphs 3.15 and 3.16 as appropriate.
12.4 What evidence must I produce under Method 6?
- a copy of the supplier’s current export price list for goods sold to the EU
- a statement from the supplier of the value of the goods
- other evidence as agreed with us
13. Valuing free of charge replacement goods
13.1 Replacement goods in the same shipment
If the supplier includes in the shipment a quantity of items ‘free of charge’ as replacements for goods likely to be defective or damaged in transit, the contracted sale price is regarded as covering the total quantity of items shipped.
13.2 Replacement goods in a subsequent shipment
The customs value is determined in accordance with paragraphs 12.1 and 12.2. However, you can ask customs to amend the customs value of the original shipment in accordance with the contractual arrangements.
14. Valuing used goods
14.1 Second-hand goods which were not used by you before entry into free circulation
You have to follow the rules set out in sections 3 to 8. No special treatment is necessary.
14.2 Goods acquired new or used and used or further used in a third country before entry into free circulation
Where the period and extent of use between being acquired and entry into free circulation results in the goods being worth less at time of entry into free circulation than when acquired, you need not use Method 1.
You can try:
- Methods 2 or 3 (see sections 4 or 5) if you import identical or similar goods of the same age and in the same condition under Method 1
- Method 4 (see section 6) if you sell the goods or identical or similar goods to unrelated customers in the EU
If you cannot use any of these Methods you must use Method 6. The customs value can be based on the value of the goods when acquired less an amount for loss of value due to the usage.
15. Valuing rented or leased goods
15.1 How do I arrive at the customs value?
When you import goods that you’ve rented or leased, there will be no sale between the supplier and yourself. However, prior to being rented or leased, the goods may have been subject to a sale. Thus it may be possible to use Method 1 (see paragraph 3.5). Otherwise Methods 2 to 5 (see sections 4 to 7) should be tried. Nevertheless, in most cases, Method 6 will be appropriate (see paragraph 15.3).
15.2 Can I use a cash price?
Sometimes a cash price is quoted in the rental or leasing agreement in case you wish to purchase the goods at a later date. However, this cash price may be artificially high to encourage the renting or leasing of the goods. Alternatively it may be an option to buy when the goods are effectively second hand. Thus such a cash price does not constitute a sale and cannot be used under Method 1.
15.3 How do I arrive at a value using Method 6?
You multiply the annual rental or leasing cost by the expected economic life of the imported goods.
Where the rental or leasing cost includes interest it is necessary to calculate the ‘cash’ price of the goods. This is done by using a formula. There are 2 formulae which can be used, depending on if the payment is made in advance or arrears. Further information about the formulae is given in section 44.
For further advice you should contact the helpline where it is difficult to determine the expected economic life of the imported goods.
16. Goods lost, damaged or defective
16.1 What this section covers
Notice 266: rejected imports - repayment or remission of duty and VAT gives details of the duty relief provisions. This section is intended to cover the cases when those provisions cannot be used.
16.2 What if I do not receive all of my goods?
No duty is due on any goods shown to have been short-shipped or lost in transit before release from customs charge into free circulation.
16.3 What if the goods are damaged?
If you can prove to us that damage occurred before the goods were released from customs charge into free circulation, you can ask for the customs value to be amended. See paragraph 9.8 for goods entered under the SPV scheme.
16.4 What evidence must I produce?
We cannot list all acceptable forms of evidence but some examples are:
- a credit note from the seller
- a statement from the customs officer who examined the goods
- a certificate of condemnation
- a statement from the Port Health Official
- a statement from an independent expert such as a surveyor
- details of settlement of claim against insurer or carrier
But see paragraph 9.8 for goods entered under the SPV scheme.
16.5 How do I arrive at the customs value?
Depending on the evidence you can produce you can do this by for example:
- apportioning the original price paid or payable to take account of partial loss or damage
- using the revised price paid or payable where the seller reduces the price as a result of the loss or damage
- comparing the price at which you sell the damaged goods with the published average market values for the same type of goods at the time of sale, and using the ratio to apportion the invoice price
16.6 What if the goods are found to be defective after importation?
If the defects are repaired, and the seller reimburses you under warranty for the cost of the warranty work carried out by you or on your behalf, you can submit a claim for repayment of duty to Customs National Duty Repayments Centre.
16.7 What evidence must I produce?
(a) Provide full details of the contractual arrangements covering the warranty work that have been agreed between you and the seller of the imported goods.
(b) Show that the seller has accepted responsibility under the warranty for the defects in respect of the particular goods in question and agreed to make the reimbursement for the warranty work.
(c) Provide a clear audit trail to show that you’ve been reimbursed for the post-importation warranty work required on the imported goods which evidences and links:
- the discovery and nature of the defect (including sufficient details to identify the goods concerned)
- the repair work undertaken and the cost
- the reimbursement of the repair cost by the seller in accordance with the terms of the warranty, (if details are not available - demonstrate how the precise amount for the repair cost has been calculated and that the seller or warrantor has accepted liability for that amount)
(d) Provide details of the customs entry for the goods in question.
16.8 How do I calculate the amount I claim?
You must calculate the amount of Customs Duty that would have been paid if the customs value of the imported goods had been reduced by the amount of the reimbursement you receive from the seller of the goods and deduct this amount from the duty that was actually paid. You can claim the difference.
16.9 Are there any time limits?
Yes. There are 2 time limits which must both be met if you are to make a claim. You must ensure that the:
- amount of the reimbursement is adjusted within 12 months from the date of acceptance of the customs entry that resulted in the duty being paid on the goods being repaired
- claim is submitted within 3 years of the date of the acceptance of the customs entry that resulted in the duty being paid on the goods being repaired
For example, where a consignment was imported on 1 June 2012 and an adjustment was made on 1 April 2013, a claim can be made to cover the cost of repairs reimbursed under warranty if submitted before 1 June 2015.
16.10 Are there any other conditions?
Yes, the amount claimed under these arrangements for any specific imported item may not exceed the original declared value of that item resulting in a ‘negative’ value.
Note: customs reserves the right to carry out any appropriate verification enquiries and to request access to any relevant documentation before claims are processed.
17. Delivery costs
17.1 What are ‘delivery costs’?
- the cost of transport
- the cost of insurance (including global or blanket policies)
- loading and handling charges
- container charges (for example when hired for transportation of the imported goods)
- terminal charges (charges for a variety of services in connection with the handling/storage of freight containers at container depots)
- any other charges involved in carrying the goods from one place to another
17.2 Are all of the costs to be included in the customs value?
No. Only costs up to the place of introduction of the imported goods into the customs territory of the EU are to be included.
Remember you must include in the customs value all inland transport and associated costs in the country of export.
17.3 Where is the ‘place of introduction’?
If the goods are:
- delivered direct to the UK the place of introduction is the port of importation into the UK
- delivered to an EU member state before being sent to the UK the place of introduction is the port of unloading in that EU member state
- transhipped in the EU the place of introduction is the port of transhipment (this is subject to transhipment being certified by customs at that port)
The place of introduction is the point where the EU border is first crossed during the air journey.
Road, rail or inland waterway
The place of introduction is the point where the goods first pass a customs office on EU territory - this is usually the point when the goods cross the EU border.
The place of introduction is the address for delivery, for example, your office or home.
17.4 Can I deduct EU transport costs where they are included in the total freight charge?
Yes. If the freight is charged separately and distinguished, the freight charge can be apportioned to arrive at the value for the journey after the EU border.
For goods transported by sea the freight charge that would have been paid to the place of introduction is to be included in the customs value. Rates shown in rate books or otherwise advertised by the shipping line or other carrier are usually acceptable.
For goods transported by rail or road the freight charge is to be apportioned using reasonable means for example by distance covered outside and inside the EU. Section 45 gives other examples.
The percentage of the air transport costs shown on the air waybill to be included in the customs value is set out in an EU Regulation. The percentages are listed in section 46. Importers connected to CHIEF can obtain details from the relevant data files.
Remember locally agreed rates for EU transport costs for VAT purposes must not be used for ad valorem Customs Duty calculations.
17.5 Can I deduct EU transport costs where they are included in the price I pay for the goods?
Yes, a deduction for these charges may be made from the price you pay, provided they can be distinguished and evidence can be produced to support them. Section 45 gives examples.
The following would be acceptable as evidence:
- the amount shown separately on the seller’s invoice
- a certified statement or telex from the supplier
- an invoice or certified statement of the actual freight amount charged by the carrier to the buyer, seller or agent
- an invoice or certified statement establishing the total cost of transport, split to show the proportion of actual distance inside and outside the community
- a statement from the buyer referring to a schedule of freight rates normally applied for the same mode of transport
- in the case of goods imported by air, a statement on the invoice confirming that the cost of freight included in the price is the same as that stated on the air waybill
17.6 What if the transport is free or I provide my own transport?
You must include in the customs value an amount for transport costs to the EU border. You can calculate this amount by using the freight rates tariff for the type of transport used, for example IATA rates for air transport costs, or conference rates for sea.
17.7 Is the cost of insuring the goods against loss or damage in transit to be included in the customs value?
Yes. You must include the cost of insurance for the goods up to the place of introduction into the customs territory of the EU. However, if you pay a premium which covers the whole journey, the cost of insurance after the EU border does not have to be included in the customs value provided you separately distinguish this element. Also, where there is separate cover for the journey after the EU border, the cost of this separate insurance cover does not have to be included in the customs value.
Remember if your insurance covers more than one importation, or relates to other items as well as the imported goods, the cost of that insurance must be apportioned and the appropriate amount included in the customs value. An example of how to apportion a periodic insurance premium to individual consignments is provided in section 45.
17.8 Can I leave out container terminal costs?
Yes, if they are separately charged and are for a container terminal in the EU.
17.9 Can I leave out demurrage charges?
Yes, if the charge is made as a result of delay after arrival of the goods at the place of introduction.
But charges for delay before arrival of the goods at the place of introduction are to be included in the customs value.
17.10 Can I use surface freight costs when goods are sent by air?
In normal circumstances, no. However, where the contractual arrangements between buyer and seller:
(a) are in force at the time of entry of the goods concerned to free circulation
(b) require the seller to have the goods transported by air to ensure agreed delivery deadlines are met, and
(c) the seller has to bear the additional costs, the following treatment will apply:
- if the terms of the original order were CIF (Cost, Insurance and Freight) or post CIF, then the terms change to CIP (Carriage and Insurance Paid To) and the air transport cost is considered to be included in the CIP price. No further addition for transport and associated costs is required
- if the terms of the original order were FOB, those terms change to CIP or CPT (Carriage Paid To). The CIP or CPT price is considered to include the air transport cost. No further addition for transport and associated costs is required unless any further costs are incurred by the buyer, for example, for insurance or if the buyer makes a contribution towards the additional air transport costs (for example by paying an amount equal to what it would have cost to transport the goods by sea). In which case those costs have to be included in the customs value.
In either case, the cost of transport in the EU can be excluded from the customs value, provided the costs are shown separately on the invoice, or can be evidenced by alternative satisfactory means.
Note: you should contact our helpline for further information if consignments are shipped late on a regular basis.
17.11 Can I leave out a currency adjustment factor?
Where an additional charge is billed by an agent, rather than the shipping line/carrier of the goods, it may be left out of the customs value, subject to evidence being produced to substantiate the actual total cost of transporting the goods. In all other situations the charge is dutiable.
17.12 Can I leave out a bunker adjustment factor?
No. This surcharge is raised by shipping lines to take account of fluctuations in the price of marine fuel. A similar ‘fuel surcharge’ is applied where goods are transported by air to compensate for fluctuations in the price of aviation fuel.
17.13 Should any other transport surcharges be included in the customs value?
Yes, the following surcharges are considered to be part of the cost of transporting the goods to the place of introduction in the EU and must be included in the customs value:
- peak season surcharge
- security surcharge
- war risk surcharge
- UK port congestion charge
In addition any other payment or surcharge charged by the shipping line, airline or carrier of the goods, which does not relate to a cost incurred, or an activity or operation taking place after the arrival of the goods at the place of introduction must be included in the customs value of the goods.
Note: where the surcharge is made in connection with transport by air, it may be included in the total air transport costs declared for apportionment purposes.
18. Rates of exchange - conversion of foreign currency
18.1 What must I do if all or part of any amount to be taken into account in arriving at the customs value is shown in a foreign currency?
You must convert to sterling any foreign currency amount which needs to be taken into account in arriving at the customs value. Also you must convert to sterling any other part of the customs value shown in foreign currency, for example, freight or insurance.
18.2 Can I use the rate of exchange at which I make settlement?
No. Unless paragraphs 18.3 or 18.5 apply.
18.3 Can I use a fixed rate of exchange?
You should use the fixed rate when the:
- contract of sale specifies that a fixed rate of exchange is to be used to convert a foreign currency amount to sterling
- seller is to receive payment in sterling
18.4 What if the supplier requires payment in a foreign currency?
If the invoices are in sterling at a fixed rate of exchange quoted in the contract of sale, that rate of exchange must be used to convert the sterling amount into the foreign currency. The resulting foreign currency amount must be reconverted to sterling at the customs rate of exchange applicable at the time of importation (see paragraph 18.5).
18.5 Which rate of exchange must I use?
If paragraph 18.3 does not apply you must use the rate of exchange published by us for use at the time the entry to free circulation is accepted.
However, for periodic declarations, you may ask us to accept a single exchange rate based on the rate applicable on the first day of the period covered by the declaration in question.
18.6 How are the customs rates designated?
The monthly rates are fixed under provisions set out in EU legislation (see the correlation table at paragraph 26.5).
18.7 When are the rates published?
At the end of every month we publish the rates on the internet and on the CHIEF noticeboard. These give the rates of exchange to be used during the next month for converting foreign currencies for duty and import VAT purposes.
18.8 What period do the rates cover?
From the first to the last day of the next calendar month.
18.9 Where can I get details of customs rates of exchange?
From our helpline. Current and historical exchange rates are available on our website. Importers connected to CHIEF can obtain details of customs rates from the relevant data files.
19. Valuation declarations
19.1 What is a valuation declaration?
It is a form that gives information to us about the value declared on the import entry. There are 2 forms:
- form C105A to be completed when using Method 1 (see section 3)
- form C105B to be completed when using Methods 2 to 6 (see sections 4 to 8)
19.2 Must I complete a valuation declaration?
No, not unless we ask you to.
19.3 When will I be asked to complete a valuation declaration?
We may ask you to complete a form C105A or C105B for import declarations we examine on a post importation audit.
19.4 Who can sign the valuation declaration?
Forms C105A and B can be signed by any person (natural or legal):
- residing or having a place of business in the UK or EU
- who has the information needed to answer the questions on the forms
Where the forms are completed for a company, the person signing must be a responsible representative of the company, for example:
- company secretary
One of these persons may authorise an employee to sign for the company. Clearing agents may also sign these forms on behalf of the importer when authorised to do so.
Note: the person signing a declaration is responsible for the accuracy and completeness of the particulars given on the form and must be in possession of all the facts relating to the sale upon which the declared customs value is based .
20. Customs warehousing
20.1 What value must I declare at the time of importation?
You must declare a value for statistical purposes (see section 25). This value will also be used for warehouse stock control purposes.
20.2 How do I arrive at the customs value when the goods are removed to free circulation?
You do this by using one of the 6 Methods set out in sections 3 to 8 or SPVs and SIVs (section 9) for fresh fruit and vegetables.
20.3 When using Method 1 must I base the customs value on the last sale before removal?
If a proper sale for export exists when the goods arrive in the EU that is the basis for the customs value. Alternatively, when no such sale exists the sale taking place during the warehousing operation can be used as the basis for the customs value.
In situations where the goods are the subject of a sale and fulfil the conditions laid down in Article 70 UCC after being placed under a special (suspension) procedure, such a sale (and provided the sale is not a ‘domestic’ one ie between 2 EU parties) can be used for the determination of the customs value under the transaction method.
In general terms, the customs value can be based on a transaction value of a sale taking place in or from a customs warehouse in the EU territory only if the following conditions are met:
- there is no sale for export in accordance with Article 128(1)
- there is a sale in the customs warehouse that is not a domestic sale
- the sale in the customs warehouse meets the requirements of Article 70(3) of the UCC
For further advice you should contact our helpline.
20.4 When must I establish the customs value of goods removed from warehouse to free circulation?
At the time the goods are removed from the customs warehouse. This means that any elements making up the value for duty (for example, price, freight and insurance charges) which are invoiced in a foreign currency will have to be converted to sterling at the customs period rate of exchange (see paragraph 18.4) in force at the time the goods are entered for removal from the warehouse.
20.5 What value do I declare for goods that devalue whilst in a customs warehouse?
If goods depreciate in value whilst in warehouse (for example, they are goods that have missed the seasonal market) the price paid or payable in the sale for export to the UK, declared as the basis of value on entry to the customs warehousing procedure, should be used when valuing the goods on removal from warehouse.
However if, before entry of the goods to free circulation, the price paid or payable has been reduced by the supplier or seller, a revised value is acceptable providing it is supported by satisfactory evidence, and the reduction stems from contractual arrangements in place at the time the goods entered the warehouse.
20.6 Can I leave out of the customs value the cost of warehousing and/or preserving the goods?
Yes, providing it is shown separately from the price of the goods.
20.7 Where can I find out more about customs warehousing?
In Notice 232: customs warehousing.
21. Outward Processing Relief (OPR)
21.1 How do I arrive at the customs value of goods reimported after process outside the EU?
(a) The processor charges you for the cost of the process.
You must try Method 1 (see section 3 particularly paragraph 3.15(d)). The customs value will be based on the cost of the process.
All of the following items must be included in the customs value if not already in the processor’s charge:
- the value of the exported goods (where the goods are purchased from an unrelated person, the cost of acquisition is to be used - where the goods are produced by yourself or a related person, the cost of production is to be used)
- the value of any material rejected, lost or wasted before, during or after the process
- any third country Customs Duty or similar levy
Outward freight and insurance are not to be included in the built-up value. The exception to this is when the temporarily exported goods are invoiced ‘CIF’ and the outward freight and insurance is not separately distinguishable. Then the outward freight and insurance is includible in the built-up value.
(b) The processor does not charge you for the cost of the process.
As no payment is made Method 1 cannot be used. You must try either:
- Methods 2 or 3 (see sections 4 or 5) if you import identical or similar processed goods under Method 1
- Method 4 (see section 6) if you sell the processed goods or identical or similar processed goods to unrelated customers in the EC
- Method 5 (see section 7) if you can get the detailed costings of the processed goods
- Method 6 (see section 8) if you cannot use any of these Methods - the customs value can be based on the charge that would have been made for the process, additions have to be made as detailed in (a) above
21.2 Where can I find out about this relief?
In Notice 235: outward processing relief (OPR).
22. Standard Exchange System
22.1 How do I arrive at the customs value of the imported replacement products?
Charge made for the replacement products. You must try Method 1 (see section 3). The customs value will be based on the charge made for the replacement products. If this charge has been reduced to take account of the value of the exported goods, you must add back the amount of the reduction to arrive at the customs value. If you do not know the amount of the reduction you must include in the customs value the FOB export value of the exported goods.
No charge made for the replacement products. No duty is due on goods which have been repaired or replaced free of charge under warranty or similar arrangement. Relief is allowed on all costs involved including outward and return freight and insurance.
22.2 Where can I find out about this system?
In Notice 235: Outward Processing Relief.
23. Inward Processing Relief
23.1 How do I arrive at the customs value of the goods?
You do this at the time the goods are entered to the relief by using one of the 6 Methods set out in sections 3 to 8.
23.2 Where can I find out about this relief?
In Notice 221: Inward Processing Relief.
24. Valuation for VAT
24.1 What is the basis of the value for VAT?
You must base it on the value for duty even if no duty is payable.
24.2 What items must I add to the value for duty to arrive at the value for VAT?
You must add all of the following unless they are already included:
- all incidental expenses such as commission, packing, transport and insurance costs incurred up to the goods’ first destination in the UK
- all such incidental expenses where they result from transport to a further place of destination in the EU if that place is known at the time of importation
- any Customs Duty or levy payable on importation into the UK
- any Excise Duty or other charges payable on importation into the UK (except the VAT itself)
Note: commission does not include ‘buying commission’. This is considered to be a payment for services subject to the business to business rule on the place of supply of services and VAT should be accounted for on it under the reverse charge procedure. Details are given in Notice 741A: place of supply of services.
24.3 Must I include royalty or licence fees?
No. These are regarded as charges for services received from outside the EU. VAT is due on such payments at a later stage. Notice 741A: place of supply of services, gives you information on how to account for such supplies.
24.4 Must I include a discount for prompt payment?
No. Provided at the time of import a discount for early payment is still available.
24.5 What must I do if the price of the goods is in foreign currency?
You have to convert the foreign currency into sterling. Also you must convert to sterling any other part of the value shown in foreign currency for example transport, insurance, and so on. You must use the rules set out in section 18.
24.6 Are there any special arrangements for certain goods?
- hydrocarbon oils and certain racehorses - standard values have been agreed for certain goods, such as racehorses imported for auction and hydrocarbon oils you can get details from your Trade Associations
- certain imported works of art, antiques and collectors’ items - these are entitled to a reduced valuation at importation, giving an effective VAT rate of 5% details of how to calculate the reduced valuation are given in VAT Notice 702: imports
- computer software - details of how to value computer software is given in VAT Notice 702: imports
- goods reimported after process or repair abroad - details are given in VAT Notice 702: imports
24.7 How do I arrive at the value for VAT when imported goods are removed from a customs warehouse?
You follow the procedures for customs value set out in section 20 and the value rules set out in this section.
Note: the treatment of services performed in a customs warehouse or an excise or customs and excise warehouse (see paragraph 24.9) may affect the declared VAT value.
24.8 How do I arrive at the value for VAT when imported goods are removed from an excise or customs and excise warehouse?
Details are given in
- Notice 179: mineral (hydrocarbon) oils - duty and VAT - warehousing and related procedures for hydrocarbon oils
- Notice 197: excise goods - holding and movement for other excise goods
Do not forget you have to include Excise Duty in the value.
24.9 What if I cannot arrive at the value for VAT?
You can ask for release of your goods against a security, that is to say a deposit or a guarantee (see paragraph 2.5).
24.10 Where can I find out more about valuation for VAT on imports and warehoused goods?
In Notice 702: imports and Notice 702/9: warehouses and free zones.
25. Value for trade statistics
25.1 What value must I show for goods on which ad valorem duty or levy is charged?
The customs value arrived at by using the rules set out in sections 3 to 8.
25.2 What value must I show for other goods?
The price paid or payable for the goods (see section 3). You may need to add or deduct certain costs (see paragraphs 25.3 and 25.4).
25.3 What items must I add to the price paid or payable?
You must add all of the following to the price you pay unless they are already included:
- all other costs, charges and expenses connected with the sale and delivery of the goods to the port or place of importation in the UK
- selling commission
25.4 Must I leave out any items from the value for trade statistics?
Yes. The all of the following must be left out:
- buying commission
- selling commission incurred within the UK
- cost of transport within the UK
- duty or tax chargeable in the UK
25.5 What if there is no price paid or payable?
You have to arrive at a value using the rules set out in sections 3 to 8. You must add the items listed in paragraph 25.3 if they are not already included. Also you must leave out the items listed in paragraph 25.4.
25.6 What if the goods have been processed or repaired outside the UK?
You need to include the cost of the process or repair and the value of the goods when exported.
25.7 What must I do if the price or value of the goods is in foreign currency?
You need to convert the foreign currency amount into sterling (see section 18).
25.8 Where can I find out more about the value for trade statistics?
In the Tariff, Volume I, Part 14, paragraph 2.7 (for imports) and paragraph 3.1 (for exports).
26.1 Customs valuation
|Regulation number||Title||OJEC number and date|
|Regulation (EU) 952/2013||Union Customs Code||L269 9.10.13|
|Regulation (EU) 2015/2446||Commission Delegated Regulation||L343 29.12.15|
|Regulation (EU) 2015/2447||Commission Implementing Regulation||L343 29.12.15|
26.2 Entry price system - SIV
|Regulation number||OJEC No and date|
|Commission Delegated Regulation 499/14||L145 16.5.2014|
26.3 Valuation for VAT
VAT Act 1994 section 21.
EU Principle VAT Directive ( 2006/112/EC).
26.4 Value for trade statistics
|Regulation number||OJEC No and date|
|Council Regulation (EC) No 471/2009||L152 16.6.2009|
|Commission Regulation (EU) 92/2010||L31 3.2.2010|
|Commission Regulation (EU) 113/2010||L37 10.2.2010|
26.5 Correlation table
|Subject||Notice 252||Regulation (EU) No 952/2013 Article||Regulation (EU) No 2447/2015|
|Method 1||Section 3|
|Method 1||3.1||70(1)||Articles 128 and 347|
|Transaction value||3.2||70(1)||Article 128|
|Price paid||3.4||70(2)||Article 129|
|Conditions||3.9||70(3)(a) and (b)|
|Related Parties||3.10||70(3)(d)||Article 127 and 134|
|Method of Payment||3.14||70(2)|
|Delivery Costs||3.15 (a)||71(1)(e)||Articles 137 and 138|
|Containers and Packing||(e)||71(1)(a)(ii) and (iii)|
|Proceeds of resale||(f)||70(1)(c) and 71(1)(d)|
|Taxes paid in country of origin or export||(g)|
|Delivery Costs||3.16 (a)||72(a)||Articles 137 to 139|
|EU duties or taxes||(b)||72(f)|
|Marketing||(e)||Articles 1(8) and 129(2)|
|Buying Commission||(f)||71(1)(a)(i) 72(e)|
|Rights of reproduction||(i)||72(d)|
|Average additions /deductions||3.17||73(a)(b)|
|METHOD 2||SECTION 4|
|Identical goods||4.2||Articles 1(4) and 141|
|No identical goods||4.3||74(1)|
|No sales at same level or in same quantity||4.5||74(2)(a)|
|METHOD 3||SECTION 5|
|Method 3||5.1||74(2)(b)||Articles 1(14) and 141|
|No similar goods||5.3||74(1)|
|METHOD 4||SECTION 6|
|Customs Value||6.2||74(2)(c)||Article 142|
|No sale at time of importation||6.3||74(2)(c)||Article 142|
|No sale in condition as imported||6.4||74(2)(c)||Article142|
|No sale to unrelated customers||6.5||74(1)||Article 127|
|Sale in greatest aggregate quantity||6.6||Article 142|
|Profit and general expenses||6.8|
|Goods of the same class and kind||6.10|
|METHOD 5||SECTION 7|
|Method 5||7.1||74(2)(d)||Article 143|
|METHOD 6||SECTION 8|
|Method 6||8.1||74(3)||Article 144|
|Fresh fruit and vegetables - SPVs)||Section 9||74(2)(c)||Article 142
|Entry price system and SIVs||Section 10
|See paragraph 26.2|
|Frozen meats in round sets||Section 11
|Free of charge goods||Section 12
74 and 74.3
|Used goods||Section 14
74 and 74.3
|Rented or leased goods||section 15
|Goods lost or stolen||Section 16
|Delivery costs||Section 17|
|Place of introduction||17.3||Articles 137 and 138|
|EU||17.4||Articles 137 and 138|
|Transport costs||17.5||71(1)(a)||Article 138|
|Free or provided transport||17.6||Article 138(3)|
|Container terminal costs||17.8||72(1)(a)|
|Demurrage||17.9||71(1)(e) and 72(1)(a)|
|Surface costs for goods sent by air||17.10||71(1)(e)|
|Rates of exchange conversion of currency||Section 18
|Valuation declarations and statements||Section 19
|Customs warehousing||Section 20
|Outward processing relief (OPR)||Section 21
|Standard Exchange System (SES)||Section 22
|Inward processing relief (IPR)||Section 23
|Valuation for VAT||Section 24||See paragraph 26.3|
|Value for trade statistics||Section 25||See paragraph 26.4|
|No sale||Section 27||74|
|Successive sales||Section 28||70(1)||Article 47|
|Method 1 - (constraints)||Section 29||70(3)(a) to (d)||Article 133|
|Buyer and seller related||Section 30||709(3)(d)|
|Definition - ‘same family’||Section 31||Article 127(1)(h)|
|Selling agents||Section 32||70(1)(a)(i)|
|Branch offices||Section 33||74|
|Buying Commission||Section 34||71(1)(a)(i) and 72(e)|
|Royalties||Section 35||71(1)(c)||Articles 136|
|Export quotas||Section 36||70(1) and 70(2)|
|Interest charges||Section 37||72(c)|
|Methods 2 and 3||Section 38||74(2)(a) and (b)||Article 141|
|Method 4 - (greatest aggregate) quantity||Section 39||Article 142|
|Sheepmeat||Section 40||74(2)(c)||Article 142|
|Method 4(b) - (Account Sales)||Section 41||74(2)(c)||Article 142|
|SPVs||Section 42||74(2)(c)||Annex 23-02|
|SIVs||See paragraph 26.2|
|Frozen meat||Section 43||74(3)||Article 144|
|Rented or leased goods||Section 44|
|Transport costs||Section 45||Article 138|
|Air transport costs||Section 46||Annex 23-01|
27. Examples of situations where there is no sale
(a) Free consignments (for example, gifts, samples, promotion items). Where transactions do not involve the payment of a price, they cannot be regarded as sales.
(b) Goods imported on consignment. Under this trading practice, the goods would be dispatched to you not as a result of a sale, but with the intention that you would sell them for the account of the supplier, at the best price obtainable. At the time of entry to free circulation, no sale would have taken place.
(c) Goods imported by intermediaries, who do not purchase the goods and who sell them after entry to free circulation. This covers a whole range of situations encountered in commercial practice, whereby goods are delivered to intermediaries without having been the subject of a sale.
(d) Goods imported by branches which are not separate legal entities. There can be no sale, because a sale necessarily involves a transaction between 2 separate legal entities.
(e) Goods imported under a hire or leasing contract. Hire or leasing transactions by their very nature do not constitute sales, even if the contract includes an option to purchase the goods.
(f) Goods supplied on loan, which remain the property of the sender. Goods (often machinery) are sometimes loaned by the owner to a customer. These transactions do not involve sales.
(g) Goods (waste or scrap) imported for destruction in the EU, with the sender paying you for your services. As costs are incurred in connection with this destruction, the exporter would pay you an amount for your services. As you would not pay for the imported goods but, on the contrary, be paid for accepting and destroying them, no sale would have taken place.
Note: see also section 29 regarding the constraints on the use of Method 1.
28. Examples of sales for export to the UK or EU
28.1 Example 1
Company A of London orders 1,000 shirts from Company B of Brussels at a price of £7.20 each, delivered to London.
Company B has 8,000 shirts in stock in a warehouse in Taiwan which were originally purchased from a manufacturer there for £4.50 each.
Company B arranges for the goods to be shipped from the warehouse to Company A which imports the goods.
The sale with price of £4.50 does not satisfy the ‘last sale in a commercial chain’ test, nor can it be demonstrated that the corresponding sale took place for export to the UK or EU.
28.2 Example 2
Company A buys hand-carved wooden coffee tables in India and stores them in a Mumbai warehouse awaiting orders.
After a visit to the UK, Company A’s sales manager believes that there is a market for these products and ships 10 samples of 8 types of table on speculation to Tilbury via sea freight.
The 8 types of table cost Company A on average 2,000 rupees each. While the ship is at sea, Company A sells all 8 coffee tables to Company B of London for £6,400, FOB Mumbai. Before the goods arrive at Tilbury, they are re-sold by Company B to a customer in Birmingham for £7,200.
The declarant cannot use the price of 2,000 rupees per unit, because it is not the last sale in a commercial chain. Also it cannot be shown that the sale in question was for the export of goods to the community.
The sale with the price of £6,400 is also not the last sale in the chain. However, it is possible to demonstrate that the goods while in transit were sold at this price to the UK or EU.
28.3 Example 3a
Company A with a head office in Malta, buys petroleum products from Company B, a company in a third country, and stores them in facilities located in Malta. The goods conform to the standards which apply in the markets of both EU and Malta.
After 3 weeks, Company A sells the products in question to Company C a UK company, and consigns the goods from Malta to the UK.
The goods are not purchased by Company A in the context of a sale for export to the UK or EU.
Although the goods meet the norms which apply in the UK and EU, they cannot be regarded as sold for export to the UK or EU. They are sold by Company B with a destination in Malta.
Consequently, the customs value cannot be based on the earlier sale.
28.4 Example 3b
Company A, a firm established in a third country, buys in a third country petroleum product which meet the norms of the EU market. These purchases are made subsequent to receipt of specific orders by Company A from a UK firm Company B.
Due to limitations in its storage facilities in the UK, Company B requests that Company A holds the goods in its facilities for a 3 week period before shipment to the UK.
The goods are subsequently shipped to the UK.
The purchase by Company A is not the last sale in a commercial chain.
However, the goods (which meet the required EU standards) have been bought in the context of prior arrangements for re-sale and shipment to the UK or EU.
The intervention, before shipment by Company A, of a period involving the actual storage in a third country on behalf of Company B does not invalidate the requirements for a sale for export to the community.
28.5 Example 4
Company A is a US company engaged in the marketing of various types of perfumes, cosmetics, creams and so on, which it sources from various manufacturers throughout the world (price A).
The European operations are directed from Company A’s head office in Syracuse, New York and consist of rented offices in London, out of which sales persons visit the purchasing offices of EU drug stores, negotiate prices, take orders and send them for processing (shipping products, invoicing and collection of accounts) to Syracuse. Products are sold to EU customers on a delivered, duty paid basis (price B). Although the sales persons have the authority to negotiate prices and sales contracts they do not have a general authority to contract on behalf of Company A.
The declarant cannot use price A as it does not arise from ‘the last sale in a commercial chain’.
Price A would be acceptable only where additional elements exist (for example, direct shipment by the producer and the goods bear marks or specifications indicating they are destined for the EU market).
28.6 Example 5
The President of Company A of London, during a visit to Thailand, is offered a ‘close-out’ deal on 10,000 metres of assorted silk fabrics at a job lot price of £20,000 FOB Bangkok. He purchases the whole 10,000 metres and arranges for the fabric to be sent to the UK by ship on 4 April.
While attending a convention on 8 April, he meets the President of Company B, a silk blouse manufacturer from Manchester, who agrees to buy the 10,000 metres of silk now en route to the UK for £39,000, delivered to Liverpool.
The lower price sale is not ‘the last sale in a commercial chain’, but it does arise from a sale for export to the UK or EU.
28.7 Example 6
Company A of London enters into an agreement to buy 100 food mixers from Company B, a US entrepreneur at a price of £22.50 each.
Company B negotiates with Company C of Detroit to manufacture the food mixers for a price of £20.75 each, Company C being responsible for shipping the goods to Company A in London.
The lower price sale could not be claimed by the importer. It is not the ‘last sale in a commercial chain’.
However, it remains to be demonstrated that the sale to which the lower price corresponds was already a sale for export to the EU, taking account of the requirement of direct supply by the manufacturer. This proof is complete if the products when sold by the manufacturer bear specifications or marks showing their destination for the EU market.
28.8 Example 7
Company A is a multinational hotel chain with hotels in several countries, including the UK. Each UK hotel is incorporated as a separate limited liability company. At the beginning of every year, each hotel submits purchase orders to the New York head office for its supply needs for the following 12 months. The head office then submits purchase orders to various suppliers in the USA with instructions to send the goods either to each hotel directly or to the New York head office for subsequent shipment to each chain hotel. The suppliers invoice the head office in New York which then bills each hotel in the chain.
The same conclusions as for example 6 if the goods are sent to each hotel directly from the supplier. If the goods are sent to the head office before being shipped to the UK, then the sale for export test can be positive only if other elements of proof are demonstrated - the goods correspond to EU specifications or bear marks which indicate their destination for the UK or EU market.
28.9 Example 8
Company A produces perfumes, cosmetics and so on which it sells to distributors in the EU and the US.
In order to maintain differential pricing on the 2 markets, Company A requires its distributors not to re-sell the goods outside of their respective territories.
In a particular case, a UK firm buys products from the US distributor and ships the goods to the Netherlands.
The first sale does not satisfy the sale for export to the EU requirement.
29. Method 1 - conditions for use
29.1 Conditions for using Method 1
Before you can use Method 1 you must be able to satisfy all of the following conditions:
(a) There must be no restrictions as to the disposal or use of the goods by you except those which:
- are imposed or required by law or by the public authorities in the EU
- limit the geographical area in which the goods may be resold
- do not substantially affect the value of the goods
Examples of restrictions which can be ignored:
- an official licence is needed to trade in the imported goods
- the goods can be sold only in the UK
- the goods cannot be sold before a certain date, for example, cars which cannot be sold before the start of a model year
(b) The sale or price must not be subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued.
Examples of conditions or considerations for which a value cannot be arrived at the:
- seller fixes the price of the imported goods on condition that you buy other goods in specified quantities
- price you pay for the imported goods depends upon the price you charge the seller for other goods
- price you pay for the imported goods depends upon an agreement you make with the seller, for example, you import semi-finished goods on the understanding that you’ll send a specified quantity of the finished goods to the seller
But you can ignore conditions or considerations relating to the production or marketing of the imported goods. For example, the fact that you provide the seller with engineering and plans undertaken in the UK or EU does not prevent you using Method 1.
Note: where you can determine the value of a condition or consideration you can use Method 1, however, you must add that value to the price paid or payable as an indirect payment by you to the seller. When completing form C105A (see paragraph 19.1) you must put the amount in box 11(b).
(c) Where the seller receives (directly or indirectly) part of the proceeds of any subsequent resale, disposal or use of the imported goods, you must be able to make an appropriate addition to take account of this (paragraph 3.15(f) and 3.17 refer). Where you cannot make an appropriate addition, Method 1 cannot be used.
(d) If you are related to the seller (see paragraph 3.10) you must be able to show that you do not get a reduced price because of this relationship. Section 30 explains how to do this.
30. Method 1 - buyer and seller related
This section assumes you are the buyer of the goods.
30.1 General information if you are related to the seller
If you are related to the seller (see paragraph 3.11), the price paid or payable can be accepted under Method 1 as long as you can show that the relationship has not affected the price.
One way you can do this is by applying the following ‘tests’ for comparison purposes.
(a) You need to show that the price you paid to the seller is close to one of the following:
- the transaction value of identical (see paragraph 4.2) or similar (see paragraph 5.2) goods exported to the EU, in sales between buyers and sellers who are unrelated
- the customs value of identical or similar goods arrived at under Method 4 (see section 6)
- the customs value of identical or similar goods arrived at under Method 5 (see section 7)
Note: the ‘test’ values must have been accepted by us at or about the same time as the importation of the goods to be valued.
(b) Alternatively you could provide information which demonstrates that either:
- you and the seller trade with each other as though you are unrelated
- you pay the same price as unrelated buyers in the EU operating at the same commercial level and purchasing similar quantities of the goods
- the price you pay is fully costed (arm’s length)
We may also decide to examine the circumstances surrounding the sale to determine if the transaction value is acceptable.
In practice we are seeking assurance that you do not receive preferential treatment under the inter-company pricing arrangements because of your relationship with the seller. If, following enquiries, we have grounds to consider that the price is affected by the relationship, we will tell you what these grounds are. If you request, this will be in writing.
You’ll have a reasonable opportunity to respond. If it is finally concluded that the relationship has influenced the price, Method 1 cannot be used. Then you must try Method 2 (see section 4).
30.2 Transfer pricing
Transfer prices are the prices at which a multi-national enterprise (MNE) transfers physical goods and intangible property or provides services to related (associated or connected) enterprises.
Both UK tax law and EU customs law require prices within a MNE to be set, for Corporation Tax and customs valuation purposes respectively, as if group members are not related. A transfer price may be used as the basis of a Method 1 value only where:
- it fulfils the criteria of Article 70 of the Customs Code (see section 29 and paragraph 30.1) and
- all relevant costs (see section 3.15) are included in the dutiable value if paid separately from the transfer price of the imported goods
30.3 Retrospective price adjustments (related or unrelated buyer and seller)
Situations may arise, whereby, for a variety of reasons, the price that you pay to the seller for the imported goods is revised or re-negotiated after the entry of the goods to free circulation. When this happens you must consider the customs valuation and Customs Duty implications.
Where, at the time of entry, there are contractual arrangements in place between you and the seller indicating the possibility of retrospective price adjustments, the invoice price for the goods concerned would, in effect, be provisional.
This means that you cannot arrive at a final value for Customs Duty at the time of entry. Therefore you should make security arrangements (see paragraph 2.5). Alternatively you can ask us to agree to an arrangement whereby you can pay Customs Duty outright at the time of entry. Such an arrangement would involve you giving an undertaking to notify us of any price adjustments. Then we would both adjust the Customs Duty payable upwards or downwards as appropriate, according to any agreed price adjustments subsequently notified.
Where there has been a retrospective price increase, we will treat this as part of the total payment made by you to the seller for the imported goods. The fact that you agree to pay such a price increase is regarded as confirmation that the contractual arrangements implied or there was an implicit understanding between you and the seller that such an adjustment may occur, when the goods were ordered or purchased. Thus we will issue a demand (form C18) to you for the arrears of Customs Duty.
Where there has been a retrospective price decrease you may submit a claim for a refund of duty. Your claim must be accompanied by appropriate evidence including full details of the contractual arrangements as well as rebates received from and credits notes issued by the seller.
The key item of evidence is the contract between you and the seller. We accept that contracts may be verbal as well as written. However, in the case of a verbal contract we would seek alternative evidence, for example, reports of meetings, correspondence, between you and the seller. In cases of doubt we may request an affidavit from the parties to the verbal contract.
Where we are satisfied that the price decrease stemmed from contractual arrangements in force at the time of entry of the goods concerned to free circulation, an appropriate refund of duty will be made (subject to the normal rules). In particular the refund claim must be lodged with us within 3 years from the date of each relevant entry.
30.4 Can we help you?
We know from experience that trading arrangements involving related parties are complex. Therefore it is not possible to cover every situation in this section. If you need further advice from a valuation liaison officer our Helpline will provide you with contact details.
31. Definition of ‘same family’
31.1 What does members of the ‘same family’ mean?
By members of the same family we mean:
- husband and wife
- parent and child
- brother and sister (if by whole or half-blood)
- brothers (if by whole or half-blood)
- sisters (if by whole or half-blood)
- grandparent and grandchild
- uncle and nephew
- uncle and niece
- aunt and nephew
- aunt and niece
- brother-in-law and sister-in-law
- parent-in-law and child-in-law
32. Selling agents
32.1 Goods imported to prior order
If a selling agent takes orders from customers in the EU on behalf of a third country seller and then imports to fulfil those orders, Method 1 can usually be used. The customs value will be based on the selling price (inclusive of that selling agent’s commission) to the EU customer.
This also applies where the:
- contract provides for a supply of pre-ordered goods to be delivered to the customer at certain intervals to meet production requirements
- selling agent holds the customer’s pre-ordered stock for delivery on demand
Note: where you can use Method 1 in these circumstances it must be used.
32.2 Goods imported for sale from stock
Where a selling agent imports goods to sell later from stock held in the UK on behalf of the third country seller, Method 1 cannot usually be used and Methods 2 to 6 (see Sections 4 to 8) must be tried.
33. Branch offices
33.1 If Method 1 is used
(a) ‘Sales’ to branches - where goods are imported either:
- through a branch office which does not have a separate legal status of its own
- directly by the supplier’s own employees
- by a person or firm acting in the supplier’s name (for example, under Power of Attorney)
the transaction cannot be regarded as a sale.
The parties are regarded as being part of the same legal entity. A company cannot sell to itself and therefore the prices shown on inter-company transfer or accounting documents cannot be used to establish the customs value under Method 1. It may be possible to use an earlier sale, for example, if the supplier has purchased rather than manufactured the goods to be valued (see paragraph 3.5).
(b) Sales to prior order - where the goods are imported to the prior order of EU customers, the value can be established under Method 1 on the basis of the price actually paid or payable by the buyer (the customer in the EU) to the seller.
33.2 Where Method 1 cannot be used
Where Method 1 cannot be used you must try Methods 2 to 6 as explained in sections 4 to 8.
Where you can show that the intra-company invoice value between the head office and its branch or vice-versa represents a fully costed (arm’s length) price (see section 30), this would be acceptable under Method 6. It is consistent with the principles and general provisions of the WTO Valuation Agreement.
34. Buying commission
34.1 Buying commission and customs value
Buying commission is the term used for the fees paid by an importer to his agent for the services in representing him in the purchase of the imported goods.
Among the tasks undertaken by a buying agent are the following:
- to find suppliers
- tell the seller what you want
- collect samples
- inspect the goods
- buy the goods on your behalf
- arrange insurance, transport, storage and delivery of the goods
The payment (commission) made to a buying agent can be left out of the customs value so long as the payment is shown separately from the price actually paid or payable for the goods.
34.2 Do I need evidence of buying commission?
Yes. In order to exclude the payment for buying commission from the customs value, the payment must be shown separately from the price for the goods on the documentation (for example invoice, valuation declaration) accompanying the entry to free circulation.
We may ask for further evidence of the contractual and trading arrangements between you and the other parties involved in support of any claim to leave out the amount for buying commission from the customs value. This may include the following:
- a copy of the contract between you and your buying agent
- a copy of the original seller’s invoice showing the price of the goods or, alternatively if this cannot be produced
- a copy of the original seller’s contract of sale showing the price of the goods
- copies of purchase orders, correspondence or other documentation which clearly evidence a bona fide buying agency arrangement
If no evidence is available or the evidence produced is considered unsatisfactory, customs may decide that no buying agency arrangement exists and the payments you make to the agent should be included in the customs value.
Note: requests to amend a customs declaration to exclude non-dutiable elements (under Article 72) after the entry has been accepted and the goods released into free circulation will be considered on a case by case basis.
35. Royalties and licence fees
This section assumes you are the buyer of the goods.
35.1 What is a royalty or licence fee?
These terms describe payments to a person for use of that person’s patent or design rights, processes, trademarks, copyrights or for ‘know how’. Traders often have to pay for the right to manufacture, use or sell the licensor’s goods or for technical knowledge and assistance.
35.2 When do I have to include such payments in the customs value?
Royalty or licence fees payable to the seller are to be included in the customs value as long as they both:
(a) relate to the imported goods (b) are paid as a condition of the sale
This rule does not apply where such payments are made for the right to reproduce the imported goods (see paragraph 3.16(i)).
In addition a royalty or licence fee for the right to use a trademark is only to be included in the customs value where:
- the royalty or licence fee relates to goods which are resold in the same state or which are subject to only minor processing (such as diluting or packing) after importation
- the goods are marketed under the trademark, affixed before or after importation, for which the royalty or licence fee is paid
- you are not free to obtain such goods from other suppliers unrelated to the seller
35.3 What if they relate partly to the imported goods and partly to other ingredients or component parts added, or services related to the goods after their importation?
You can apportion the royalty payment between dutiable and non-dutiable elements. The basis for the apportionment of the total payment can sometimes be found in the licence agreement or be obtainable from the licensor. Where this is not the case we recommend that you contact customs (see paragraph 3.17).
Where apportionment is not possible because of a lack of relevant information, you cannot use Method 1. You must try Method 2 (see section 4).
35.4 What if I pay a third party?
The conditions in paragraph 35.2(b) equally apply. Except that payments made to a person who is not related (see paragraph 3.11) to the seller are only to be included in the customs value when the seller requires those payments to be made.
35.5 Can we help you?
We know from experience that trading arrangements involving payment of royalty or licence fees are complex and vary with each royalty or licence agreement. Therefore it is not possible to cover every situation in this section. For further advice you should contact our Helpline.
36. Export quota and licence payments
36.1 This section assumes you are the buyer of the goods.
Where the supplier of the textiles has had to purchase quota for export of the goods and passes that charge on to you, this charge may be left out of the customs value provided that evidence to support this amount as paragraph 36.3 below is obtained.
36.2 Repayment or remission applications
Claims to exclude quota charges will be dealt with under the normal Customs Duty repayment provisions. You may submit a claim to customs up to 3 years from the date of entry to free circulation. You must support all claims with the appropriate evidence as detailed below. Further details on repayments and remissions are given in Notice 199.
36.3 What evidence is needed?
Evidence could include any of the following:
a. A copy of the contract of sale with the manufacturer showing the price of the goods. b. A copy of the export quota licence transfer document and the document showing the price paid for the quota. c. A copy of any other commercial documentation confirming the cost of acquiring the quota from a third party.
36.4 Requirement to keep evidence
You should retain for inspection by customs:
- details of the Method used to establish the amount of any deduction claimed
- copies of supporting documentation including (where relevant) hard copies of website quota values
- copies of the export licences
These documents should be cross-referenced to the relevant import entries and be made available to customs on request. In the absence of satisfactory evidence the amount claimed will be rejected and a post-clearance demand issued.
36.5 Meat: ‘Hilton Scheme’ beef and veal
Under an arrangement between the EU and some exporting countries a quota is allocated for importations of high quality fresh, chilled or frozen beef or veal. This arrangement is known as the ‘Hilton Scheme’. The authorities in the exporting countries allocate the quota to slaughterhouses by issuing certificates of authenticity. If you have a certificate you do not have to pay Agricultural Levy. These certificates relate to a particular shipment. Any charge to you for a certificate must be included in the customs value of the meat.
37. Interest charges
37.1 How interest charges affect the customs value
Charges for interest under a financing arrangement entered into by you for the purchase of imported goods can be left out of the customs value as long as:
- the charges are shown separately from the price actually paid or payable for the goods
- the financing arrangement has been made in writing
- where required by us, you can demonstrate that:
- such goods are actually sold at the price declared as the price actually paid or payable (net of the interest charge)
- the claimed rate of interest does not exceed the level for such transactions prevailing in the country where, and at the time when, the finance was provided
These provisions apply to Methods 1 to 6 (see sections 3 to 8).
37.2 What evidence is needed?
The charge for interest must be shown separately from the price for the goods on the documentation (for example, invoice, valuation declaration) accompanying the entry to free circulation. We may call for further evidence in support of any claim to leave out the amount for interest charges from the customs value. Such evidence would include:
- a copy of the finance agreement
- a copy of the contract of sale of the goods if it contains the financing clause
- information to show that the claimed rate of interest is not excessive
Note: requests to amend a customs declaration to exclude non-dutiable elements (under Article 72) after the entry has been accepted and the goods released into free circulation will be considered on a case by case basis.
38. Methods 2 and 3 - Examples of adjustments for level and quantity
38.1 Same commercial level and quantity - no adjustment required
You are a wholesaler who imports 1,700 articles for which Method 1 cannot be used.
You can produce a customs entry for 1,700 articles of identical/similar goods imported by a wholesaler. This entry has been accepted by EU customs under Method 1. The customs value is 6 units per article CIF.
As the quantity and commercial level are the same no adjustment is needed. The value of 6 units per article CIF is acceptable as the customs value under Method 2/3.
38.2 Same commercial level but different quantity - no adjustment required
You are a wholesaler who imports 2,000 articles for which Method 1 cannot be used.
You can produce a customs entry for 1,700 articles of identical/similar goods imported by a wholesaler. This entry has been accepted by EU customs under Method 1. The customs value is 6 units per article CIF.
It has been established that the supplier of the identical/similar goods sells at 6 units per article CIF to wholesalers regardless of quantity ordered.
As the commercial level is the same and the quantity ordered does not affect the price no adjustment is needed. The value of 6 units per article CIF is acceptable as the customs value under Method 2/3.
38.3 Different commercial level and quantity - no adjustment required
You are a wholesaler who imports 1,500 articles for which Method 1 cannot be used.
You can produce a customs entry for 1,200 articles of identical/ similar goods imported by a retailer. This entry has been accepted by EU Customs under Method 1. The customs value is 6 units per article CIF.
It has been established that the supplier of the identical/similar goods sells at 6 units per article CIF regardless of the quantity ordered and the commercial level of the customer.
As the commercial level and the quantity ordered does not affect the price no adjustment is needed. The value of 6 units per article CIF is acceptable as the customs value under Method 2/3.
38.4 Same commercial level but different quantity - adjustment required
You are a wholesaler who imports 1,700 articles for which Method 1 cannot be used.
You can produce a customs entry for 2,300 articles of identical/similar goods imported by a wholesaler. This entry has been accepted by EU Customs under Method 1. The customs value is 4.75 units per article CIF.
It has been established that the supplier of the identical/similar goods sells at different prices depending on the quantity ordered. The price list shows that for:
- less than 2,000 articles the price is 5 units
- 2,000 articles or more the price is 4.75 units
As the commercial level is the same no adjustment is required for level. An adjustment is required for quantity. The price list shows that the price of 1,700 articles is 5 units per article. Therefore the value of the identical/similar goods must be increased by 0.25 units per article. The value of 5 units per article CIF is acceptable as the customs value under Method 2/3.
38.5 Different commercial level but the same quantity - adjustment required
You are a wholesaler who imports 2,800 articles for which Method 1 cannot be used.
You can produce a customs entry for 2,800 articles of identical/similar goods imported by a retailer. This entry has been accepted by EU customs under Method 1. The customs value is 2.5 units per article CIF.
It has been established that the supplier of the identical/similar goods sells at different prices depending on the commercial level of the customer. The price list shows that for wholesalers a 20% discount is given. Retailers pay the list price.
As the quantity is the same no adjustment is required for quantity.
An adjustment is required for commercial level. The price list shows that a wholesaler receives 20% discount. Therefore the value of the identical/similar goods must be decreased by (2.5 × 20% = 0.5) 0.5 units. The value of 2 units per article CIF is acceptable as the customs value under Method 2/3.
38.6 Different commercial level and quantity - adjustment required
You are a wholesaler who imports 2,500 articles for which Method 1 cannot be used.
You can produce a customs entry for 1,500 articles of identical/similar goods imported by a retailer. This entry has been accepted by EU customs under Method 1. The customs value is 2.5 units per article CIF.
It has been established that the supplier of the identical/similar goods sells at different prices depending on the quantity ordered. A 20% discount is also given to wholesalers. The price list shows that for:
- less than 2,000 articles the price is 2.5 units
- 2,000 articles or more the price is 2 units
An adjustment is required for quantity. The price list shows that the price of 2,500 articles is 2 units per article therefore the value of the identical/similar goods must be decreased by 0.5 units per article. Also an adjustment is required for commercial level. The wholesaler receives a 20% discount therefore the value of the identical/similar goods which has already been adjusted for quantity (2 units per article) must be decreased by (2.5 × 20% = 0.4) 0.4 units.
The value of 1.6 units per article CIF is acceptable as the Customs value under Method 2/3.
39. Method 4 - examples of arriving at the unit price in the greatest aggregate quantity
39.1 Example 1
The price list shows that different prices are charged for different quantities ordered:
|1 to 10 units||£100|
|11 to 25 units||£95|
|over 25 units||£90|
Sales are made as follows:
|Number of sales||Total quantity sold||Unit price (from price list)|
|10 sales of 5 units||50||£100|
|5 sales of 11 units||55||£95|
|2 sales of 40 units||80||£90|
Greatest number of units sold at one price is 80. The unit price of these is £90. Therefore the unit price in the greatest aggregate quantity is £90.
You import 2,000 units. The value of the consignment is therefore 2,000 × £90 or £180,000. From this value the allowable deductions as indicated in paragraph 6.7 are to be made.
900 units are imported.
500 units are sold at £95 each.
400 units are sold at £90 each.
The greatest number of units sold at one price is 500 units. The unit price is £95 each. Therefore the unit price in the greatest aggregate quantity is £95.
The value of the 900 units is therefore 900 × £95 = £85,500. From this value the allowable deductions as indicated in paragraph 6.7 are to be made.
39.2 Example 2
200 units are imported.
They are sold in small lots as follows:
The quantity sold at each unit price is as follows:
|Total quantity sold||Unit price|
The greatest number of units sold at one price is 65. The unit price is £90. Therefore the unit price in the greatest aggregate quantity is £90.
The value of the 200 units is therefore 200 × £90 = £18,000. From this value the allowable deductions as indicated in paragraph 6.7 are to be made.
40. Method 4(a) - Sheepmeat carcases - arrangement with the International Meat Trade Association Inc
40.1 General information
- import first quality sheepmeat carcases on consignment from Australia or New Zealand
- use Method 4(a)
you can, if you wish, produce the International Meat Trade Association Inc (IMTA) price list as evidence of the unit price in the greatest aggregate quantity. You must make a deduction of 10% from the IMTA price for profit and general expenses or commission, and transport costs in the EU. You also need to deduct any included duty or levy. If you use this arrangement you must quote the reference MOV 595/661/001 on the valuation declaration (see paragraph 19.1) or statement (see paragraph 19.6).
40.2 IMTA price list
The IMTA Price Committee normally issues the price list every Tuesday. The prices are to be used for customs entries accepted after midnight on the following Sunday/Monday. If a list is not issued (perhaps because of a Public Holiday) the prices on the list issued the week before are to be used.
40.3 New season sheepmeat carcases
When new season sheepmeat carcases are being imported the IMTA price list shows separate prices for new season and old season sheepmeat carcases. If you import new season sheepmeat carcases before a price is quoted on the price list, you cannot use the IMTA arrangement. You must use Method 4(b) (see paragraphs 6.3 and 6.11) for the first importation.
40.4 Sheepmeat carcases removed after sale from customs warehouse
The IMTA arrangement cannot be used. The customs value can normally be arrived at under Method 1 (see section 3).
41. Method 4(b) - fresh fruit, vegetables and cut flowers - account sales procedure
If you import fresh fruit, vegetables or cut flowers on consignment you can use the account sales procedure to arrive at the customs value under Method 4(b) (see paragraphs 6.3 and 6.11). A valuation declaration (see paragraph 19.1) is not required.
41.2 Calculation of deposits at importation
As the goods have not been sold at the time of importation, the amount of duty you must pay cannot be established. Therefore you’ll need to request release of the goods against a deposit (see paragraph 2.5). To calculate the deposit you must declare on the import entry one of:
(a) the price you expect to get for the goods
(b) the current market value (CMV) published by the trade associations
(c) the SPV customs publish (see section 9 for more details).
If you use either (a) or (b) you can deduct before calculating the deposit:
- for profit and general expenses or commission, and transport costs in the EU
- the included duty
41.3 Arriving at the duty payable
Within 90 days of the importation, you must produce to NIDAC evidence of the sale of the goods. No other values, such as SPVs or values used to calculate the deposit may be used.
If any goods are not sold in the same state as imported or are unsold, the unit price established for identical or similar produce in the same consignment, which has been sold in the condition in which it was imported, must be used.
The amount of duty you must pay will then be calculated.
If the deposit you paid was too high you’ll receive a refund - if it was too low we will ask you to pay more.
41.4 Evidence of sale
Copy invoices. You must produce copy invoices issued to wholesalers or supermarkets. These invoices must show the prices paid by these customers.
Statement of sales. If you find it difficult to produce copy invoices (perhaps because you sell to many customers) you can produce a statement showing the following details:
- names and addresses of the wholesalers or supermarkets
- quantity sold to each wholesaler or supermarket
- prices paid by each wholesaler or supermarket
- details of items repacked, destroyed or lost and so on
Remember you must have the copy invoices available to produce on request.
41.5 Certification of evidence of sale
You must certify on the invoices or statement that:
- all the goods on the import entry are accounted for
- the prices shown are those paid by the wholesaler or supermarket
You may deduct the following from the amount paid to the importer by the wholesaler (net of wholesalers’ commission and handling expenses) or the price paid by the supermarket:
- 10% to cover your commission and general expenses (the percentage has been agreed with the trade associations)
- the usual costs of transport, insurance and associated costs incurred in the EU
- EU customs duties
41.7 Evidence of deductions
You need only produce either of a:
- copy of the freight account, which can be split by the distance inside and outside the EU
- statement of the cost of transporting the goods from the person supplying the freight
Note: only importers who provide their own transport can make a simple statement of the cost of EU freight.
41.8 Losses in repacking
The number of items (such as cartons or boxes) lost in repacking must be shown on the duty reconciliation statement. Minor losses of this nature may be disregarded but where the losses are substantial the procedure set out in section 16 is to be followed.
41.9 Arriving at the customs value
You need to use the following formula:
- price paid by the wholesaler or supermarket
- less 10%
- less transport costs etc in the EU
- less included duty
41.10 Example of calculating the customs value
The goods are sold for £10,000. The transport costs in the UK and EU are £200. The duty rate is l0%. The deposit was £900.
Using the formula:
Price paid £10,000 less 10% (£1,000) = £9,000 less transport costs £200 = £8,800 less included duty (10/110 × 8,800)= £800 gives Customs value £8,000
The duty due is therefore £800.
You’ll get a refund of £100 (£900 - £800).
The document used for this calculation is called the duty reconciliation statement. You are to provide such a statement so that the duty due can be calculated.
41.11 Guaranteed advances
You may agree to make a payment to the supplier on condition that if the net proceeds from the sale of the goods are:
(a) more than the agreed payment, you’ll also send your supplier the balance
(b) less than the agreed payment, you’ll stand the loss
This agreement is called a guaranteed advance.
If (a) applies, Method 4(b) can be used.
If (b) applies, the guaranteed advance is to be used as the basis to arrive at the customs value under Method 1.
41.12 Example where guaranteed advances are involved
The goods are sold for £5,000. Your commission and expenses are £600. The duty rate is 10%. You agree to pay the supplier:
(1) £3,000 (2) £5,000
(1) Goods sold for £5,000 less commission/expenses £600 = £4,400 less included duty (10 ÷ 110 × £4,400 = £400. Net proceeds £4,000 less amount already paid to supplier £3,000 leaves balance payable to supplier £1,000.
Method 4(b) can be used.
(2) Goods sold for £5,000 less commission/expenses £600 = £4,400 less included duty (10 ÷ 110 × £4,400 = £400. Net proceeds £4,000. Amount already paid to supplier £5,000 exceeds net proceeds therefore Method 4(b) cannot be used.
The Customs value under Method 1 is to be based on the guaranteed advance of £5,000.
42. SPVs - List of products covered
|SPV code||Description||Commodity Code|
|1.10||New potatoes||0701 90 50|
|1.30||Onions||0703 10 19|
|1.40||Garlic||0703 20 00|
|1.170||Beans||0708 20 00|
|1.200.1||Asparagus: green||0709 20 00 10|
|1.200.2||Asparagus: other||0709 20 00 90|
|1.240||Sweet peppers||0709 60 10|
|1.270||Sweet potatoes, fresh or chilled, whole||Ex 0714 20|
|2.30||Pineapples||0804 30 00 09|
|2.40||Avocados||0804 40 00 10|
|2.60||Sweet oranges||0805 10 20|
|2.70.1||Clementines||0805 20 10 05|
|2.70.2||Monreales and satsumas||0805 20 30 05|
|2.70.3||Mandarins and wilkings||0805 20 50 07
0805 20 50 37
|2.70.4||Tangerines and others||0805 20 70 05
0805 20 90 05
0805 20 90 09
|2.85||Limes (citrus aurantifolia, citrus latifolia)||0805 50 90 11
0805 50 90 19
|2.90.1||Grapefruit white||0805 40 00 11|
|2.90.2||Grapefruit pink||0805 40 00 9|
|2.100||Table grapes||0806 10 10|
|2.110||Water melons||0807 11 00|
Amarillo, Cuper, Honey Dew (including Cantalene), Onteniente, Piel de Sapo (including Verde Liso), Rochet, Tendral, Futuro
|0807 19 00 10
0807 19 00 30
|2.120.2||Other melons||0807 19 00 91
0807 19 00 99
- Nashi (Pyrus pyrifolia)
- Ya (Pyrus bretscheideri)
|0808 20 50 10|
|2.140.2||Pears - other||0808 20 50 90|
|2.150||Apricots||0809 10 00|
|2.170||Peaches||0809 30 90|
|2.180||Nectarines||0809 30 10|
|2.190||Plums||0809 40 05|
|2.200||Strawberries||0810 10 00|
|2.205||Raspberries||0810 20 10|
|2.220||Kiwi fruit||0810 50 00|
43. Frozen meat in round sets - alternatives to the use of Method 1
43.1 Alternatives to the use of Method 1
|Where…||the customs value may be based on…|
|(a) the invoice from the foreign supplier clearly includes a breakdown of unit prices for each of the cuts||see unit prices but only if they are not average prices.|
|(b) the whole consignment is entered directly to free circulation or removed from customs warehouse at the same time||the invoice price for the whole consignment. In this case you do not need to obtain a breakdown of unit prices from the foreign supplier.|
|(c) Part of the consignment is being entered but it contains a natural balance (a set) of cuts and the invoice price accompanying the goods reflects the price of the set||customs value may be based on the invoice price as in (b) above.|
|(d) particular cuts are entered to free circulation piecemeal and the invoice from the foreign supplier does not provide an acceptable breakdown of unit prices for each of the cuts||‘worksheet’ Method. This involves an apportionment of the price paid or payable to the foreign supplier, taking into account the weights of the various cuts in the consignment and the CMV for the individual cuts applicable on the date of the purchase contract for the whole consignment. The current market value can be established from the weekly list of prices issued to the trade by lMTA. An illustration of how the price actually paid for the consignment can be apportioned on the basis of market prices is given at paragraph 43.2 below. The customs value must not be established by reference to average prices.|
|(e) a sale of particular cuts has been made to a third party or agreed with a third party (there is a verbal or written contract of sale) before removal of the cuts from customs warehouse into free circulation||the price paid or payable by the third party. In such a sale, the following items may be excluded from the customs value provided that they are separately distinguished from the price paid or payable for the goods:
-the cost of warehousing and/or preserving the goods whilst in warehouse
-the cost of acquiring a GATT import licence for the goods through a necessary purchase from a third party (charges included in the price to compensate the seller for the notional value of an allocated GATT import licence are includible in the customs value)
-included EU duties or levies, see paragraph 3.16(b)
43.2 Example of apportioning the price paid using market values
Consignment quantity = 1,000 pounds.
Invoice price = £1,000. Average unit price = £1 per pound.
‘A’ Cuts = 200 pounds CMV = £2.00 per pound = £400
‘B’ Cuts = 500 pounds CMV = £1.50 per pound = £750
‘C’ Cuts = 300 pounds CMV = £1.00 per pound = £300
The ratio is thus 28:52:20
Apportioning the invoice price of £1,000 produces the following:
‘A’ Cuts = £280 = £1.40 per pound
‘B’ Cuts = £520 = £1.04 per pound
‘C’ Cuts = £200 = £0.66 per pound
These unit prices would then be used to establish the customs value of those cuts removed to free circulation instead of the average unit price.
44. Rented or leased goods - case studies
44.1 Case study one - yearly hire charge (not including maintenance)
An electronic sorting machine is imported by a user under a hire contract, the main terms of which are:
(a) the importer is to pay the supplier a yearly hire charge of £1,000 in advance
(b) the machine is to be erected and maintained by the supplier at the expense of the importer
(c) import duties and taxes are borne by the importer
(d) post importation transport costs are borne by the importer
The machine is invoiced pro forma at an amount corresponding to 2½ years of rental. No payment is made in respect of this invoice. It has been established that these machines are never sold and are available only to users who are prepared to subscribe to the above contract for 5 years.
The importer and supplier are not related. The estimated life of the machine is 5 years. The interest rate is 15% per annum.
Therefore Q = 1,000, R = 15%, N = 5
Image showing example of a calculation to find the amount of duty included in the invoice price
£3,855 rounded down in the importer’s favour.
As this represents a value at the EU border, no further adjustments are required.
44.2 Case study 2 - yearly hire charge (including maintenance and other expenses)
A machine which produces artificial hair is imported by a doll manufacturer under a hire contract, the main terms of which are:
(a) the importer is to pay the supplier a hire charge of £1,000 per annum
(b) the hire charge is to be paid annually in arrears
(c) the supplier will maintain the machine free of charge
(d) import duties and taxes will be paid by the importer
(e) the costs of delivery to the importer’s premises will be paid by the supplier
The machine is invoiced at a nominal price in respect of which no payment is made. The importer and supplier are not related.
The estimated life of the machine is 13 years. The interest rate is 15% pa. The average maintenance cost will be £140 pa.
Therefore Q = (1000 - 140) = 860, R = 15%, N = 13
Image showing example of a calculation of the amount of duty included in the invoice price
£4,801 rounded down in the importer’s favour.
A deduction for the extra cost of delivering the goods beyond the place of introduction into the EU may be appropriate, subject to the normal rules.
45. Examples of apportionment of transport costs and insurance charges
45.1 Goods invoiced on pre-CIF EU border terms
Goods purchased on FOB terms.
Freight from Japan to Tilbury separately charged - £1,000.
Goods imported at Tilbury.
Place of introduction Tilbury.
The charge for transport is to the place of introduction.
No deduction for transport in the UK or EU is needed. Therefore the amount to be included in the Customs value for transport costs is £1,000.
Goods purchased on FOB terms.
Freight from Norway to buyer’s warehouse in Glasgow separately charged - £200.
Goods imported at Leith.
Place of introduction Leith.
The place of introduction is Leith but the charge for freight is to the buyer’s warehouse in Glasgow.
The journey from Leith to Glasgow is in the UK.
The cost of the journey from Norway to Leith is shown in the shipping line’s rate book as £180.
Therefore only £180 is to be included in the customs value.
Goods purchased on ex-works terms.
Freight from seller’s factory to New York is separately charged - £50.
Freight from New York to Felixstowe is separately charged - £600.
Goods imported at Felixstowe.
Place of introduction Rotterdam where the goods were transhipped.
The place of introduction is Rotterdam.
But the charge for freight is to Felixstowe.
The journey from Rotterdam to Felixstowe is in the EU and UK.
The cost of the journey from New York to Rotterdam is shown in the shipping line’s rate book as £550.
The whole of the freight charge from the seller’s factory to New York is to be included in the customs value.
Total freight addition = £550 + £50 = £600.
Goods purchased on delivered airport of departure terms.
Air transport costs from New York to Heathrow Airport separately itemised - £300.
Total air waybill charges (inclusive of charges for loading and handling at airport of departure) - £350.
Goods imported at Heathrow Airport.
Place of introduction is the notional point where the aircraft crosses the EU border.
The place of introduction is the EU border BUT the charge for freight is to Heathrow Airport.
The journey from the EU border to Heathrow Airport is in the EU. Therefore the cost of that part of the journey is to be deducted from the total charge for the air transport costs.
Total air transport costs - £300
Percentage of journey outside EU 70% (see section 46). Therefore 70% of the air transport costs are to be included in the Customs value:
70% × £300 = £210
The difference between the air way bill charges and the air transport costs. These are made up of costs incurred in the country of export, such as loading, handling and clearing charges. The total cost must be included in the customs value.
£350 - £300 = £50
Total charge to be included in the Customs value = £210 + £50 = £260
Goods purchased on FOB aircraft terms.
Air transport costs from New York to Frankfurt Airport separately charged - £400.
Air transport costs from Frankfurt Airport to Heathrow Airport separately charged - £100.
Goods imported at Heathrow Airport.
Place of introduction is the notional point where the aircraft from New York to Frankfurt crosses the EU border.
The place of introduction is the EU border. The air transport costs from Frankfurt Airport to Heathrow Airport are not to be included in the customs value because that journey is in the EU.
Also the journey from the EU border to Frankfurt Airport is in the EU. Therefore the cost of that part of the journey is to be deducted from the total charge for the air transport costs (from the £400).
Total air transport costs from New York to Frankfurt - £400
Percentage of journey outside the EU - 70%
(Section 46 gives details of the percentage of the air transport costs to the EU which must be included in the Customs value).
Therefore 70% of the air transport costs from New York to Frankfurt are to be included in the Customs value:
70% × £400 = £280.
Goods purchased on FOB Hong Kong terms.
Goods shipped by sea to Singapore and then by air to Heathrow Airport.
The charge for sea freight from Hong Kong to Singapore is £550.
The charge for air freight from Singapore to Heathrow Airport is £1,000.
Goods imported at Heathrow Airport.
Place of introduction is the notional point where the aircraft crosses the EU border.
The sea journey is outside the EU. Thus the sea freight charge of £500 is includible in the customs value.
The journey from the EU border to Heathrow Airport is in the EU. Therefore the cost of that part of the journey is to be deducted from the total charge for air freight.
Total air freight charge - £1,000
Percentage of journey outside EU 70% (see section 46 Malaysia all airports to London).
Therefore 70% of the air freight is to be included in the customs value:
70% × £1,000 = £700.
Total charge to be included in the customs value = £500 + £700 = £1,200
Goods purchased on FOB Tokyo terms.
Goods shipped by sea from Tokyo to Seattle and then by air from Seattle to Heathrow Airport.
The total freight charge from Tokyo to Heathrow Airport is £2,000. No breakdown of the charges for the sea and air journeys is available.
Goods imported at Heathrow Airport.
Place of importation is the notional point where the aircraft crosses the EU border.
The place of introduction is the EU border but the charge for freight is to Heathrow Airport.
The journey from the EU border to Heathrow Airport is in the EU. Therefore the cost of that part of the journey is to be deducted from the total freight charge.
As no breakdown of this charge is available, for practical convenience the air transport cost apportionment may be used.
Percentage of journey outside EU 83% (section 46).
Therefore 83% of the total freight charge is to be included in the customs value. 83% × £2,000 = £1,660.
45.2 Goods invoiced on post-CIF EU border terms
Goods purchased on CIF Birmingham terms.
Goods imported at Avonmouth.
Place of introduction Avonmouth.
The invoiced amount includes transport to Birmingham, which is beyond the place of introduction but is not separately charged.
The seller states that the amount included in the invoice price for the transport from Avonmouth to Birmingham is £50.
Therefore the amount to be deducted from the invoice price for post-introduction transport cost is £50.
Goods purchased on uniform free delivered domicile terms.
Goods imported at Dover.
Place of introduction Dover.
Evidence is provided to show that the free-frontier price would be lower than the uniform free domicile price.
The invoiced amount includes transport to the buyer’s premises in Manchester, Glasgow and Middlesbrough.
The seller states that the average amount included in the invoice price for transport in the EU to the buyer’s premises is £9 per metric tonne.
Therefore the amount to be deducted from the invoice price for post-introduction transport costs is £9 per metric tonne.
Goods purchased on delivered Brighton terms.
Goods imported at Newhaven.
Place of introduction Marseille (that is, the EU border).
The invoiced amount includes transport to Brighton which is beyond the place of introduction but is not separately charged.
There is no statement from the seller of the amount included in the invoice price of the transport from Marseille to Brighton.
But there is a statement from the haulier of the price charged for the transport to the seller.
This evidence can be accepted without confirmation from the seller that this charge has been costed into the price to the buyer.
Goods purchased on CIF Heathrow Airport terms.
Goods imported at Heathrow.
Place of introduction is the notional point where the aircraft crosses the EU border.
The invoiced amount includes air transport costs to Heathrow, which is beyond the place of introduction but is not separately charged.
There is no statement from the seller of the amount included in the invoice price for the air transport costs to Heathrow.
A copy of the air waybill is produced as evidence of the amount charged for the air transport.
This evidence will be accepted by us providing it can be confirmed that the charge shown on the air waybill is the amount costed into the CIF price by the seller of the goods. The percentages shown in section 46 can then be applied in the normal way.
Where no confirmation can be obtained from the seller, no deduction can be allowed and the air transport percentages do not apply.
45.3 Example of apportionment of insurance costs
Annual set premium - £350
Total value of imports in the previous 12 months - £1,750,000
The premium can be expressed as a percentage of the total value of imports.
350 ÷ 1.750,000 × 100 = 0.02%
This percentage can be used to calculate the insurance costs for individual imports made during the following 12 months.
Where the total value of imports includes, for example, insured or non-insured goods or both dutiable and non-dutiable imports, the percentage can be adjusted if the relevant information is available.
46. Air transport costs - percentage to be included in the customs value
The percentages of air transport costs to be included in the customs value are shown in Annex 23.01 of Regulation 2447/2015.
The percentages came into effect on 1 May 2004 and apply to all airports of arrival in the UK. Only the air transport costs are to be apportioned not the air waybill or other ancillary charges.
Note: air transport costs includes any surcharges clearly related to the transport of the goods (as opposed to those applied to loading and handling charges at the airport of departure).
Column 1 - third countries (that is, those outside the EU), listed by continents and zones. The percentages are valid for all airports in a given country unless specific airports of departure are indicated.
Column 2 - the percentages which represent the part of the air transport costs from a given third country to the EU to be included in the customs value.
(a) When goods are shipped from countries or from airports not included in the following table, other than the airports referred to in (b) below, use percentage for the listed airport nearest to that of departure.
(b) As regards the French overseas departments of Guadeloupe, Guyana, Martinique and Reunion, of which territories the airports are not included in the table, the following rules shall apply:
- for goods shipped direct to those departments from third countries, the whole of the air transport cost is to be included in the customs value
- for goods shipped to the European part of the community from third countries and transhipped or unloaded in one of those departments, only the air transport costs which would have been incurred for carrying the goods only as far as the place the place of transhipment or unloading are to be included in the customs value
- for goods shipped to those departments from third countries and transhipped or unloaded in an airport in the European part of the community, the air transport costs to be included in the customs value are those which result from the application of the percentages given in the following table to the costs which would have been incurred for carrying the goods from the airport of departure to the airport of transhipment or unloading.
- the transhipment or unloading shall be certified by an appropriate endorsement by the customs authorities on the air waybill or other air transport document, with the official stamp of the office concerned; failing this certification the provisions of the last subparagraph of Article 163 (6) of Regulation (EEC) 2454/93 shall apply.
|Zone (country) of departure (third country)||Percentages of the air transport costs to be included in the Customs value for zone of arrival EU|
Gander, Halifax, Moncton, Montreal, Ottawa, Quebec, Toronto, (other airports see zone B)
United States of America:
Akron, Albany, Atlanta, Baltimore, Boston, Buffalo, Charleston, Chicago, Cincinnati, Columbus, Detroit, Indianapolis, Jacksonville, Kansas City, Lexington, Louisville, Memphis, Milwaukee, Minneapolis, Nashville, New Orleans, New York, Philadelphia, Pittsburgh, St Louis, Washington DC (other airports see zones B and C)
Edmonton, Vancouver, Winnipeg (other airports see zone A)
United States of America:
Albuquerque, Austin, Billings, Dallas, Denver, Houston, Las Vegas, Los Angeles, Miami, Oklahoma, Phoenix, Portland, Puerto Rico, Salt Lake City, San Francisco, Seattle (other airports see zones A and C)
United States of America:
Anchorage, Fairbanks, Honolulu, Juneau (other airports see zones A and B)
Algeria, Egypt, Libya, Morocco, Tunisia
Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Djibouti, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Sudan, Togo
Burundi, Democratic Republic of Congo, Equatorial Guinea, Gabon, Kenya, Rwanda, São Tomé and Principe, Seychelles, Somalia, St. Helena, Tanzania, Uganda
Angola, Botswana, Comoros, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Republic of South Africa, Swaziland, Zambia, Zimbabwe
Armenia, Azerbaijan, Georgia, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Syria
Bahrain, Muscat and Oman, Qatar, Saudi Arabia, United Arab Emirates, Yemen (Arab Republic)
Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan.
Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Russia: Novosibirsk, Omsk, Perm, Sverdlovsk, (other airports see zones L, M, and O)
Brunei, China, Indonesia, Kampuchea, Laos, Macao, Malaysia, Maldives, Mongolia, Myanmar, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam
Irkutsk, Kirensk, Krasnoyarsk, (other airports see zones K, M and O)
Japan, Korea (North), Korea (South), Russia: Khabarovsk, Vladivostok (other airports see zones K, L and O)
|Australia and Oceania|
Australia and Oceania
Iceland, Russia: Gorky, Kuibishev, Moscow, Orel, Rostov, Volgograd, Voronej (other airports see zones K, L and M), Ukraine
Albania, Belarus, Bosnia-Herzegovina, Faroe Islands, Former Yugoslav Republic of Macedonia, Moldova, Montenegro, Norway, Serbia, Turkey
47. Glossary of terms
Note: delivery terms, as defined by the International Chamber of Commerce, are available in the current publication of ‘Incoterms’.
|Account sales||A term used when goods imported on consignment are valued for customs purposes by reference to the price they achieve when sold in the Community. Account sales commonly apply to importations of perishable goods.|
|Ad valorem duty||Duty expressed as a percentage based on the customs value of the goods, for example, 10% ad valorem means that the duty payable is 10% of the customs value of the goods.|
|Commission||Commission is a payment made to an intermediary who acts on behalf of either the seller of the goods (selling commission) or the buyer of the goods (buying commission).|
|Customs warehouse||A place approved by Customs and Excise for the storage of goods without payment of import duty. Import VAT is also suspended during storage of warehoused goods (see Notice 232 customs warehousing).|
|Declarant||A person who signs the valuation declaration or statement. Also a person who completes and signs a SAD.|
|EU (European Union)||Austria, Belgium, Bulgaria, Croatia, Cyprus*, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, the Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and EU generally apply.
*The European Commission has advised that the application of the Community Customs Code and 6th VAT Directive shall be suspended in the Turkish Republic of Northern Cyprus in which the Government of the Republic of Cyprus does not exercise effective control. Goods from those areas will continue from 1 May 2004 to be treated as non-EU imports.
|EU Commission||The EC equivalent of our civil service.|
|EEC||Now referred to as EU (see above).|
|FIO (Free in and out)||The freight rate covers the sea freight only. The costs of loading and discharging the cargo are not included.|
|Free circulation||Imported goods are in free circulation when:
-all the import procedures are completed
-all import duties have been paid
|GATT||General Agreement on Tariffs and Trade.|
|GVS (General Valuation Statement)||A form used as a ‘season ticket’ in place of individual valuation declarations.|
|Importer||The person declared as such in Box 8 of the SAD (import declaration). The importer can be any person having ownership of or a beneficial interest in the goods between the time of their importation and when they are delivered out of charge.|
|Invoice||The document against which the buyer pays the seller for the goods.|
|IPR||Inward Processing Relief.|
|Member States||Countries which belong to the EU (see list under EU).|
|NIDAC||National Import Duty Adjustment Centre|
|OJEC||Official Journal of the European Communities.|
|OPR||Outward Processing Relief.|
|On consignment||Goods imported for post importation sale in the EU where the value of the sale is not known at the time of importation.|
|SAD (Single administrative document)||The EU form used to declare imported goods to Customs. Full details of the form and its completion are given in the Tariff, Volume 3.|
|SES||Standard Exchange System.|
|SIVs (Standard Import values)||SIVs are a special system for valuing certain fresh fruit and vegetables at certain times of the year, when the entry price system is in force. SIVs do not operate concurrently with SPVs.|
|SPVs (Simplified procedure values)||SPVs are a special system for valuing certain fresh fruit and vegetables.|
|Tariff||HM Revenue & Customs Tariff and Overseas Trade Classification.|
|Third Country||Any country which is not a member of the EU.|
|WCO||World Customs Organisation.|
|WTO||World Trade Organisation.|
Your rights and obligations
Your Charter explains what you can expect from us and what we expect from you.
Do you have any comments or suggestions?
If you have any comments or suggestions to make about this Notice, write to:
HM Revenue and Customs
Customs and International
10 South East
21 Victoria Avenue
This address is not for general enquiries.
For your general enquiries contact imports and exports: general enquiries.
Putting things right
If you are unhappy with our service, contact the person or office you’ve been dealing with. They’ll try to put things right. If you are still unhappy, they’ll tell you how to complain.
If you want to know more about making a complaint go to hmrc.gov.uk/ and under quick links, select Complaints and appeals.
How we use your information
HMRC is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.
We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:
- check the accuracy of information
- prevent or detect crime
- protect public funds
We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and Customs authorities. We will not give information to anyone outside HMRC unless the law permits us to do so. For more information go to hmrc.gov.uk and look for Data Protection Act within the Search facility.