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HMRC internal manual

Guidance on the Audit of Customs Values

HM Revenue & Customs
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Method 6

The ‘fallback’ method

This is the method of last resort which is to be used only when the preceding methods of valuation cannot be applied. Article 31 of the Code sets out three basic provisions for determining the customs value under this method:

Number Basic provision
1. The value must be determined on the basis of information which is available in the EC using any reasonable means consistent with the valuation provisions of the Code and the WTO instrument on which they were based. There is no bar on information sourced from outside the EC provided that Customs is able to be satisfied as to its truth or accuracy (WCO AO 12.3 refers).
2. The value must not be based on any of a proscribed list of values (see Constraints below).
3. The value should be based on one of the preceding methods of valuation applied with appropriate flexibility and, wherever possible, on previously determined customs values.

Note: WCO AO 12.1 comments on the ‘flexibility’ aspect. WCO AO 12.2 indicates that, when applying the preceding methods of valuation flexibly, the hierarchical order should be followed.


Article 31.2 of the Code specifically disbars the following values from being used:

  • the selling price in the EC of goods produced in the EC
  • a system which provides for the acceptance for customs purposes of the higher of two alternative values
  • the price of the goods on the domestic market of the country of exportation
  • the cost of production, other than computed values which have been determined for identical or similar goods in accordance with Article 30.2(d)
  • prices for export to a country not forming part of the customs territory of the EC
  • minimum customs values or
  • arbitrary or fictitious values.

Practical application

It is UK policy to apply this method as flexibly as possible, especially in circumstances where to do otherwise would cause administrative burdens for importers and/or Customs. For example, cases arise where there is no transaction for the purposes of Method 1 but there is an inter-company or intracompany invoice price or value. In such cases, where the importer can demonstrate that this price or value represents an ‘arms length’ price, then that price or value may be used under Method 6.

For administrative purposes this approach may be regarded as a flexible application of Method 1. This avoids the need for the importer to meet the evidential requirements of Methods 2 to 5 and the need for Customs to examine and verify such evidence at the post-importation audit stage.