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HMRC internal manual

Guidance on the Audit of Customs Values

Treatment of used motor vehicles: basis of value

Basically there are two types of situation which need to be dealt with in the valuation of imported used vehicles. They are as follows:

  1. the vehicle is imported pursuant to a purchase without intervening use and
  2. the vehicle is imported after additional use since the purchase.

If importation follows upon a sale without intervening use, the price actually paid or payable should serve as the basis for establishing a transaction value under Method 1 providing all other requirements and conditions are fulfilled. If the requirements and conditions cannot be met the customs value must be determined by applying Methods 2 to 5 in sequential order.

Where the vehicle is imported after additional use since the purchase, Method 1 cannot be applied, as there is no price actually paid or payable for the vehicle in its condition at the time of importation. The value must, therefore, be determined by another Method.

Both situations can raise problems when trying to establish a suitable basis of value under other Methods.

Methods 2 and 3

The application of these Methods presupposes the existence of goods identical or similar to those being valued, exported at or about the same time as those goods. Furthermore, the value of these identical or similar goods must have been determined under Method 1. It seems doubtful whether these conditions can be fulfilled in the specific case of used vehicles imported by private individuals; however, there might occasionally be scope for applying Methods 2 or 3, particularly in the case of importations by commercial dealers.

Method 4

Failing the use of Methods 2 or 3 if the imported used vehicles or identical or similar used vehicles are sold after importation in the same condition as imported, Method 4 may be applied whenever the requirements of that Method can be met.

In cases where the requirements cannot be met but the used vehicles are sold after further processing (for example, repair, reconditioning, fitting of accessories) Method 4 may still be applied if the importer so requests. The deductions needed to take account of the value added by such processing or reconditioning will then have to be made.

Method 5

Since used motor vehicles are obviously not manufactured as such, the provisions of this method cannot be applied.

Method 6

It follows, therefore, that in many cases the customs value of used motor vehicles will have to be determined under Method 6. Under this ‘fall-back’ method the value may be determined using any reasonable means consistent with the principles and general provisions of the WTO Valuation Agreement and the flexible use of any of Methods 1 - 5 as agreed with the importer.

The customs value could, for example, be based on the price actually paid or payable for the vehicle. In this case the goods would have to be valued with reference to their condition at the time of valuation. The price would, therefore, need to be adjusted to take account of the depreciation (with reference to age or use) incurred since purchase.

In cases where there is no price actually paid or payable, the value might be determined in consultation with the importer on the basis of the transaction value previously accepted for imported new vehicles of the same make and model. This value would then have to be adjusted to reflect the vehicle’s condition at the time of valuation by taking into account, on the one hand depreciation resulting from age, wear and obsolescence and, on the other hand, additional accessories that do not normally form part of the equipment of the vehicle in question. Further adjustment might prove necessary, to take into account any differences in level and quantity between the transactions. In the event of there being no importations of new vehicles of the same make and model, the method described in the previous paragraph could be applied using transaction values already accepted for similar new vehicles.