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HMRC internal manual

Guidance on the Audit of Customs Values

From
HM Revenue & Customs
Updated
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Case studies: Valuation Method 4(b)

Case study - usual profit and general expenses

Facts

Goods are imported and it is established that they are sold to unrelated buyers at various prices depending on quantity purchased. Sales are made at £85, £90 and £95 at a ratio of 10:8:7. The greatest aggregate quantity selling price is therefore £85.

Following examination of the trading accounts, it is agreed with the importer that the profit and general expenses element is 15% of the total sales figures. This figure is in line with the norm for the particular trade.

Calculations

From this information, the percentage deduction appropriate to the unit price may be calculated.

10   units sold at £85
     
8   units sold at £90
7   units sold at £95
25    
Deduction of 15% for usual profit and general expenses = 335.25
     
Net duty inclusive customs value of one item = £2,235 - 335.25
    25
  = 75.99

The difference between the net duty inclusive customs value of £75.99 and the unit price of £85 is £9.01; and this represents 10.6% of the unit price in the greatest aggregate quantity.

Conclusion

The allowable deduction in respect of the usual profit and general expenses from the unit price in the greatest aggregate quantity is therefore 10.6%.