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HMRC internal manual

Guidance on the Audit of Customs Values

Exclusions from the customs value: valuation treatment

Whilst the law might appear to cover only payments made for the rights to physically reproduce the imported goods, the intention is that the provisions relate to both the physical and intellectual reproduction or performance of a reserved right. Therefore all payments made for any or all of these rights are potentially excludible from the customs value. (WCO Comm 19.1 refers).

In order to determine the customs value of imported goods it must be established whether:

  • an idea or original work is incorporated in, or reflected by the goods
  • the reproduction of this idea or work or public performance thereof is the subject of a reserved right
  • this right of reproduction and/or public performance has been assigned to the buyer and
  • the holder of the right of reproduction and/or public performance has required a remuneration for the assignment of this right.

It follows therefore that the exclusion of amounts identified as payments for right of reproduction must leave a sum which represents the price which buyers may be reasonably expected to have paid for the goods had they purchased them without the right to reproduce any copyright material or registered design either carried or inherently embodied in the imported goods. For example:

Type of goods Description
Video tape In the case of a video tape carrying film imported for copying (and/or public performance), the customs value would be established by reference to the price which the buyer would be expected to have paid for the right to view, but not reproduce (or publicly perform) the film.
Moulds or dies The customs value of the imported moulds or dies would be established on the assumption that the moulding or, in the case of a die, the design is owned by the buyers and they had simply contracted the suppliers to manufacture the imported moulds or dies.

Where there is no buyer and the goods are supplied ‘free of charge’ the same principles will apply when arriving at the customs value.