Cases involving fixed exchange rates - examples: Case study 1
Many importations of timber and plywood are arranged through UK based selling agents under a written contract of sale. Such contracts may specify a price in sterling or a foreign currency. The supplier invoices the agent, exclusive of selling commission, and the agent invoices the buyer at a full commission inclusive price.
Where the contract is in a foreign currency the agent will usually invoice the buyer in that currency, but also convert the price payable to sterling at an apparently fixed exchange rate quoted on the invoice. The buyer remits the sterling amount to the agent but the agent will remit in the foreign currency, exchanged at the rate quoted on the invoice.
The sterling amount transferred by the buyer is not to be used for customs duty purposes, as the rate of exchange quoted by the agent is not fixed in the contract of sale. The value to be declared is the commission inclusive price invoiced to the buyer in foreign currency, converted to sterling at the appropriate customs rate at the time of entry to free circulation.