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HMRC internal manual

Guidance on the Audit of Customs Values

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HM Revenue & Customs
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Method 1 (transaction value): conclusion by the Committee

The Committee concluded that the basic intention of the Agreement is to apply the term ‘sale’ in the widest possible sense. This is achieved by reading Article 1 together with Article 8 (Code Articles 29 and 32). Article 8 provides, amongst other things, for adjustments to the price actually paid or payable in cases where certain specific elements, which are considered to form part of the value for customs, are incurred by the buyer but are not included in the price actually paid or payable for the imported goods.

Article 8 also provides for the inclusion in the transaction value of certain considerations (‘assists’) which may not pass from the buyer to the seller in the form of money. Thus, where an importer imports goods from a processor and supplies goods and services (for example, components, moulds, tools, artwork, design work, engineering, development) to the processor for use in the production of the imported goods, the customs value may be established under method 1.

The customs value would be based on the cost of processing plus the cost of the ‘assist’ supplied plus delivery costs. This is also known as a ‘built up’ or ‘constructed’ value and is particularly relevant to importers using the Outward Processing Relief system. A ‘built up’ or ‘constructed’ value can also be used in the context of an ‘earlier’ sale (GACV03550).