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HMRC internal manual

Guidance on the Audit of Customs Values

Objective and quantifiable data

Law

Article 71.2 of the UCC states:

‘Additions to the price actually paid or payable shall be made under this Article only on the basis of objective and quantifiable data.’

Practical application

Bearing in mind that it is a fundamental principle of the WTO Valuation Agreement that Method 1 should be used to the greatest extent possible, it is the UK policy to apply the above legal provision pragmatically. This approach is underpinned by the provisions of Article 73(a)(b) of the UCC.

Article 73(a)(b) recognises that there are circumstances when it is not possible at the time of entry to free circulation to quantify the ‘additions’ specified in Article 71 and the ‘exclusions’ specified in Article 72. Thus this Article provides Customs with the opportunity, at the request of the importer, to determine a method whereby an ‘addition’ or ‘exclusion’ could be quantified. Consequently Customs can agree with importers a percentage addition to cover, for example, royalty and licence fees or tooling charges. There is also scope for agreeing average additions or deductions to cover delivery costs.

By invoking Article 73(a)(b) the necessity to use security arrangements and the incomplete declaration procedure is avoided. In addition Method 1 can be used and therefore it is not necessary to consider the alternative methods of valuation. Thus there are administrative savings for both Customs and the Trade.