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HMRC internal manual

Guidance on the Audit of Customs Values

Rented or leased goods


Where rented or leased goods are imported, there will be no sale between the consignor and consignee. Prior to being rented or leased, the goods may have been subject to a sale. Thus it may be possible to use Method 1. Otherwise Methods 2-5 should be tried. In most cases, Method 6 will be appropriate, using the formula given below (WCO Study 2.1 provides further guidance).

Optional cash price

Sometimes a cash price is also quoted in the leasing agreement in case the importer wishes to purchase the goods at a later date. Such a price does not constitute a sale and cannot be used under Method 1 (WCO Advisory Opinion 1.1 Paragraph V refers). Before the cash price can be accepted under Method 6, it is important to know what such a price represents. It may be that the price is high to encourage the leasing of the goods, or it may be an option to buy when the goods are effectively second hand (for example after 3 years use).

Basis of value

The customs value of the goods can be established using a formula which calculates the ‘cash’ price of the goods. In effect, it removes the interest payments from the value. If interest payments are separately distinguished on the invoice or in the contract, then the formula is unnecessary. The total payment to the leasor can be used as the basis of value.

There are two formulas which can be used, depending on whether payment is made in advance or in arrears.

Interest rates

The interest rate used for the calculation should be that actually used by the leasor in the build up of the rental charge. If this is not known, then the UK clearing bank rate at the time of entry plus 1% should be used.

As with damaged goods if the goods are re-exported, abandoned or destroyed, there is no liability to duty.

If the goods are retained, they will fall into one of two categories; wrong goods (for example woollen gloves instead of sweaters) or correct goods which fail to conform to the original specifications to the extent that the supplier makes some form of restitution.