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HMRC internal manual

Guidance on the Audit of Customs Values

HM Revenue & Customs
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Method 1 (transaction value): successive sales


EC legislation relating to customs valuation contains provisions for circumstances where the imported goods have been the subject of a chain of sales prior to entry to free circulation. The rules covering successive sales are set out in Article 147 of the CCIP as amended by Regulation (EC) No 1762/95, Article 1.2 CVS Comm 7 provides further guidance.

An earlier sale can 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.

In addition the requirements of Article 178 to 181 of the CCIP relating to valuation declarations must be met. In particular the declarant must be able to ‘attest’ to the ‘earlier sale’ upon which the customs value is to be based. This means that the declarant must be in possession of all the facts relating to that transaction and, on request, be able to provide evidence of settlement between the relevant buyer and seller to the satisfaction of audit staff.

Repayment claims

Claims for repayment of duty where the importer wishes to use a previously undeclared earlier sale are to be rejected. Any of a series of sales is a lawful basis of value. Article 236.1 of the Code only provides for repayment of duty when the amount declared has exceeded what is legally due. European Court of Justice Case 11/89 has supplemented this. The ECJ ruled that, where a lawful sale has been declared, it cannot be amended after release of the goods into free circulation (Article 65 of the Code refers).

Where underpayments have occurred on a later sale and the entry is reopened, the trader cannot revert to an earlier sale. Underpayment action is to be taken as normal.