Valuation of Imported Goods For Customs Purposes, VAT and Trade Statistics

Notice 252 Valuation of imported goods for customs purposes, VAT and trade statistics June 2009
Foreword
This notice cancels and replaces Notice 252 (June 2006).
Further help and advice

If you need general advice or more copies of HM Revenue & Customs notices, please phone the Helpline on 0845 010 9000. You can call between 8.00 am and 8.00 pm, Monday to Friday. If you have hearing difficulties, please phone the Textphone service on 0845 000 0200. If you would like to speak to someone in Welsh, please phone 0845 010 0300, between 8.00 am and 6.00 pm, Monday to Friday. All calls are charged at the local rate within the UK. Charges may differ for mobile phones.
Other notices on this or related subjects

702 VAT: Imports
1. Introduction 1.1 What this notice is about

There are a number of Methods for establishing the value on which customs duty and import VAT is calculated. The same value is also used for trade statistics. This notice explains what the Methods are and when they may be used. You can also access details of any changes to this notice since June 2009 on our website at www.hmrc.gov.uk This notice explains our view of the law, and nothing in it overrides the law.
1.2 Who should read this notice?

It is mainly for importers and their clearing agents. The notice is written as though you are the importer unless otherwise stated. Our notices and other information are available on our website at www.hmrc.gov.uk
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1.3 Why do I need a value for customs duty?

We often charge customs duty as a percentage of the value of your goods we call this ad valorem duty. The amount of duty you must pay depends on the customs value of your goods. The rules for arriving at the customs value are based on the WTO Valuation Agreement (previously known as the GATT Agreement).
1.4 What law covers customs valuation?

These rules are set out in EC Regulations which are listed in Section 26. All EC legislation is available on the Internet (http://europa.eu/index_en.htm).
1.5 What is import VAT?

VAT due at import is treated like a customs duty. The amount of VAT you must pay depends on the value of the goods. The rules for arriving at this value are set out in the VAT Act 1994, Section 21.
1.6 What are trade statistics?

We have to collect and compile trade statistics for UK (the balance of payments) and EC purposes. You must always declare a value for trade statistics on the import entry or removal document from Customs warehousing. This value must be declared in the value for duty box whether or not ad valorem duty is to be paid or the goods are to be entered to a Customs warehouse.
2. Customs duty 2.1 Where can I find out if I have to pay ad valorem customs duty?
In the Customs Tariff. This lists all the customs duty rates, commodity codes and procedures relating to imported goods. You can ask for details from our Helpline.
2.2 How do I arrive at the value for customs duty?

You do this by using one of 6 ways or Methods. You must try Method 1 before going on to Method 2 and so on. We may ask you to explain why an earlier Method cannot be used. The only exception to the order of trying the Methods is that you may try Method 5 before Method 4 if you wish. You can use the SPV (for goods imported on consignment) or SIV systems (see Sections 9 and 10) if you import the fresh fruit and vegetables.
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Sections 3 to 8 explain the 6 Methods. However, the normal Method of valuation is Method 1 (the transaction value Method). You must use this Method wherever possible and in fact it is used for over 90% of importations liable to ad valorem customs duty.
2.3 Must I produce evidence to support the value for customs duty?
Yes. The evidence for each Method is described in the relevant Sections. You must produce any documents and information about an importation which one of our officers requires. You may also be required to allow officers to inspect or take extracts from any relevant document.
2.4 How long must I keep customs records?

You must keep them for a period of at least four years.
2.5 What if I cannot arrive at the value for customs duty?

You can ask for release of your goods by paying the undisputed charges outright and securing the balance by cash or cheque we call this a deposit. When the value is agreed you may be asked to pay more duty or you may get a refund we call this adjusting the deposit. If the deposit equals the amount of duty due you will be told we call this bringing the deposit to account. As an alternative to a cash deposit, you may be able to use a guarantee, underwritten by a bank. The Helpline will be able to advise you further.
2.6 What do I do if I disagree with a Customs decision?

If you do not agree with any decision issued to you there are three options available. Within 30 days of the date of the decision you can either: send new information or arguments to the decision maker request a review of the decision by someone not involved in making the disputed decision. Your request must be in writing and should set out the reasons why you do not agree with the decision. Please write to:
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Customs and International Review and Appeals Team 7th Floor South West Alexander House 21 Victoria Avenue Essex SS99 1AA, or appeal direct to the Tribunal who are independent of HMRC.
If you opt to have your case reviewed you will still be able to appeal to the tribunal if you disagree with the outcome. Further information relating to reviews and appeals is contained in factsheet HMRC1 which can be obtained from our website or by phoning 0845 900 0404.
3. Method 1 3.1 What is Method 1?

It is the first Method you must try. It is called the transaction value. It is the normal Method of valuation which applies to over 90% of importations liable to ad valorem customs duty.
3.2 What is meant by transaction value?

This is the price paid or payable by the buyer to the seller for the goods when sold for export to the EC adjusted in accordance with specific rules explained in detail in the following paragraphs. This may also cover situations where goods are imported from a processor. The transaction value may be built up or constructed by reference to the cost of processing plus any items to be added in accordance with paragraph 3.15 below particularly sub-paragraph (d). Such items are commonly referred to as assists.
3.3 What if there is no sale?

This rules out Method 1. You must try Method 2. Ignore the rest of this Section and go direct to Section 4. Examples of situations where there is no sale are given in Section 27.
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3.4 How do I arrive at the customs value?

You base it on the price actually paid or payable by the buyer to the seller for the goods. This means the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. It includes all payments made or to be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller. Thus periodic payments (such as monthly, quarterly, annually) or one off payments by the buyer to the seller for the imported goods must be taken into account (for example tooling charges, engineering fees, development costs). The buyer of the imported goods need not necessarily be established in the country of importation.
3.5 What happens if there is an earlier sale where the imported goods have been sold more than once prior to entry to free circulation?
Where goods are sold only once, the fact that they are declared for free circulation in the Community can be taken as confirming that the goods were sold for export to the Community. Where the goods are sold to one or more subsequent buyers before entry into free circulation, this also applies to the last sale in the commercial chain prior to the introduction of the goods into the customs territory of the Community.
3.6 What other information and documentary evidence is required?

Where an earlier sale has taken place involving the imported goods, you may declare the earlier sale as the basis for the customs value. NOTE. An earlier sale may not be used as the basis for import VAT where the import declaration is made in the name of a final consumer or retail customer. Remember you can only use an earlier sale where it can be demonstrated that there are specific and relevant circumstances which led to export of the goods to the customs territory of the Community. Ways in which you can do this include the following: the goods are manufactured according to EC specifications, or are identified (according to, for example, the marks they bear) as having no other use or destination the goods in question were manufactured or produced specifically for a buyer in the EC, or
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specific goods are ordered from an intermediary who sources the goods from a manufacturer and the goods are shipped directly to the EC from that manufacturer.
Examples illustrating case situations are given in Section 28. The term earlier sale may also apply to built up or constructed values (see paragraph 3.2). NOTE. The person completing and signing the valuation declaration, form C109A (see paragraph 19.6) must be in possession of all the facts relating to the sale upon which the declared customs value is based (see paragraph 19.7). This includes having access to the relevant accounting records kept in third countries in order to provide documentary evidence of settlement between the relevant buyer and seller to our satisfaction. Also, having declared a sale, which is accepted by us as the basis for the transaction value, you cannot subsequently amend the original declaration to another sale if the goods have been released into free circulation.
3.7 What evidence of the price paid or payable must I produce?

A copy of the sellers invoice or other document against which payment will be made. This will include telex or similar messages used instead of invoices. (See also paragraph 2.3).
3.8 What if Customs has doubts about the transaction value?

Where we have doubts that the declared transaction value represents the total amount paid or payable, we will ask you for more information. If those doubts continue we shall notify you (in writing if you request) of the grounds for those doubts before making a final decision about the acceptability of the declared value. You will be given a reasonable opportunity to respond. Then we will make a final decision and notify you of it in writing. (See paragraph 2.6 if you disagree with a customs decision.)
3.9 What if the sale is subject to any restrictions?

If the sale is subject to conditions which restrict your freedom to dispose of or sell the goods as you wish you may not be able to use Method 1 (see Section 29).
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3.10 What if I am related to the seller of the goods?

The fact that you are related to the seller of the goods does not mean that Method 1 cannot be used. The price paid or payable is still acceptable unless as a result of the relationship you get a reduced price (see Section 30).
3.11

What does related to the seller mean?

they are officers or directors of one anothers businesses they are legally recognised partners in business they are employer and employee any person directly or indirectly owns, controls or holds 5% or more of the outstanding voting stock or shares of both of them one of them directly or indirectly controls the other both of them are directly or indirectly controlled by a third person together they directly or indirectly control a third person, or they are members of the same family (see Section 31).
Persons (natural or legal) are related if:
But if you act as the sellers agent, distributor or concessionaire you are related only if one of the above categories also applies.
3.12 If Im an intermediary (such as a selling agent) or branch office can I use Method 1?
You may be able to use Method 1. Section 32 for selling agents or 33 for branch offices give further information.
3.13 Does it matter whether I pay the seller direct?

No. You can pay a third party if the seller says so.
3.14
Does it matter whether I pay in cash?
No. You can also pay by letters of credit or negotiable instrument.
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3.15 What items must I add to the price paid or payable?

You must add the following to the price you pay (unless they are already included): (a) Delivery costs. The costs of transport, insurance, loading or handling connected with delivering the goods to the EC border must be included. Section 17 gives further details. (b) Commissions. Certain payments of commission and brokerage, including selling commission, must be included. Section 32 gives more details about selling agents. But you can exclude buying commission if it is shown separately from the price paid or payable for the goods (see paragraph 3.16(f) and Section 34). (c) Royalties and licence fees. You must include these payments when they relate to the imported goods and are paid by you as a condition of the sale to you of those goods. You can find further information in Section 35. (d) Goods and services provided free of charge or at reduced cost by the buyer. If you provide, directly or indirectly, any of the following, you must include in the customs value any part of the cost or value not included in the price charged to you by the seller: (i) materials, components, parts and similar items incorporated in the imported goods including price tags, kimball tags, labels (ii) tools, dies, moulds and similar items used in producing the imported goods, for example, tooling charges. There are various ways of apportioning these charges (iii) materials consumed in producing the imported goods, for example, abrasives, lubricants, catalysts, reagents etc which are used up in the manufacture of the goods but are not incorporated in them, or (iv) engineering, development, artwork, design work and plans and sketches carried out outside the EC and necessary for producing the imported goods. The cost of research and preliminary design sketches is not to be included. NOTE. If you make any payments (periodically or one off) to the seller for any of the above goods and services, you must include the amounts in the customs value (see paragraph 3.4). (e) Containers and packing. Include: the cost of containers which are treated for customs purposes as being one with the goods being valued (that is not freight containers the hire-cost of which forms part of the transport costs), and
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the cost of packing whether for labour or materials.
Where containers are for repeated use, for example, reusable bottles, you can spread their cost over the expected number of imports. If a number of the containers may not be re-exported, this must be allowed for. (f) Proceeds of resale. If you are to share with the seller (whether directly or indirectly) the profit on resale, use or disposal of the imported goods you must add the sellers share to the price paid (but see paragraph 3.16(d) as regards dividends). For example, if the seller is to have 30% of the profit which you receive, this is to be added to the price paid or payable. If at the time of importation the amount of profit is not known, you must request release of the goods against a deposit or guarantee (see paragraph 2.5). (g) Export duty & taxes paid in the country of origin or export. When these taxes are incurred by the buyer they are dutiable. However, if you benefit from tax relief or repayment of these taxes they may be left out of the customs value.
3.16 Can I leave out any items from the customs value?
Yes. The following items may be left out of the customs value: (a) Delivery costs within the EC. If the sellers or carriers charge covers delivery beyond the EC border you may deduct the additional charges for such delivery, providing they are shown separately from the price paid or payable for the goods. Section 17 gives more details. (b) EC duties or taxes. You can deduct from the price you pay any included customs duty or other taxes which are payable in the EC because of the importation or sale of the goods. To find the amount of duty included in the invoice price, use the formula:
For example, if the duty inclusive invoice price is 1100 and the rate of duty is 10% the duty included in that invoice price is:
Therefore the included duty is 100. NOTE. The included duty is the last item to be deducted.
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(c) Discounts. These can only be left out where they relate to the imported goods being valued and there is a valid contractual entitlement to the discount at the material time for valuation. Discounts (such as contingency or retroactive discounts) related to previous importations cannot be claimed in full on the current importation. (i) Quantity or trade discounts. You can leave out these discounts where earned. In other words the price paid or payable net of these discounts is acceptable. If you are related to the seller the discounts will also be allowed if that relationship has not affected the price of the goods (see paragraph 30.1). (ii) Cash and early settlement discounts. You can also leave out these discounts on the following basis: when the payment reflecting the discount has been made at the time of entry to free circulation if the payment has not been made at the time of entry to free circulation, it will be allowed at the level declared provided it is a discount generally accepted within the trade sector concerned if the discount is higher than is generally accepted within the trade sector concerned it will only be accepted if you can demonstrate, where required, that the goods are actually sold at the price declared as the price actually paid or payable and the discount is still available at the time of entry to free circulation.
NOTE. If you never take advantage of a cash discount and always pay the gross contract price for the goods, the discount may become liable for inclusion in the customs value at the time of entry to free circulation. For further information you should contact our Helpline. (d) Dividends. You can leave out dividend payments you make to the seller.
(e) Marketing activities related to the imported goods. You are not required to include in the customs value the cost of the following activities which you carry out at your own expense: advertising promotion, or guarantee or warranty services.
In addition any payments that you make towards general marketing support which are not related to imported goods, should not be included. NOTE. The cost of marketing activities borne by the seller are to be included in the customs value even if they are charged separately from the invoice price for the goods.
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(f) Buying commission. You may leave out fees or brokerage paid to your agent for representing you outside the EC in buying imported goods, providing the commission is shown separately from the price paid or payable for the goods. See Section 34 for further details. NOTE. Buying commission is to be included in the value for VAT. Paragraph 24.2 refers. (g) Export quota and licence payments. You may leave out payments for buying export quotas and licences. But you must include payments for certificates of authenticity for meat. See Section 36 for further details. (h) Interest charges. These may be left out if they are payable under a financing arrangement for buying the imported goods, providing the charges are shown separately from the price paid or payable for the goods. See Section 37 for further details. (i) Rights of reproduction. Payments for these rights may be left out if they are shown separately from the price paid or payable for the goods. (j) Post-importation work. You may leave out charges for: construction work erecting assembling maintaining, or giving technical help
for goods such as industrial plant, machinery or heavy equipment. The work may be carried out before or after importation so long as it is carried out as part of the installation of the imported goods and the charge must be shown separately from the price paid or payable for the goods. (k) Management fees. You can leave out management fees that you pay to the seller. This would include general service fees for administration, marketing, accounting, etc., that are not related to the imported goods. NOTE. You may need to produce evidence to support any claim to leave any of the items mentioned in this paragraph out of the customs value.
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3.17 What can I do if, at the time of entry, I cannot arrive at a value for an item that:
(a) (b) I must add to the price paid or payable, or I may leave out of the customs value?
You can ask us to agree to a Method for arriving at an appropriate amount to add or exclude at the time of entry. This could involve the use of average values or a percentage addition or deduction and be subject to periodic reviews.

It is the second Method you must try. It is based on the customs value of identical goods exported to the EC at or about the same time as the goods to be valued.
4.2 What is meant by identical goods?

These are goods produced in the same country as those being valued. They must also be the same in all respects, such as physical characteristics, quality and reputation. Minor differences in appearance do not matter. If the producer of the Method 2 goods does not produce Method 1 goods, another producers goods may be used for comparison.
4.3 What if there are no identical goods?

This rules out Method 2. You must try Method 3. Ignore the rest of this Section and go direct to Section 5.

You base it on a customs value of identical goods already accepted by EC Customs under Method 1. Where there is a sale at the same commercial level and in the same quantity this must be used. If more than one value is available use the lowest.
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4.5 What if there are no sales at the same level or in the same quantity?
You may use sales at a different commercial level or in different quantities. But when arriving at the customs value you must take into account any effect these differences have on the price. There are examples in Section 38.
4.6 Are there any other differences I must take into account?
Yes. You must take account of differences between the costs of delivering the identical goods and delivering the goods to be valued.
4.7 What evidence must I produce?

A copy of, or the necessary data to enable us to trace, an import entry (with supporting documents) for identical goods where Method 1 has been accepted by us or another EC Customs administration. This entry must relate to identical goods exported at or about the same time as the goods to be valued. This is to ensure that the goods to be valued and the identical imported goods will have been exported within a timescale in which the price of the goods would not have changed.
4.8 What if identical goods are to be valued under both Method 1 and Method 2?
If some of the goods are sent free of charge, (see Section 12) and they are entered on the same import entry, the evidence provided with that entry can be used to establish both the customs values. We may need a copy of the producers price list where differences for level or quantity have to be taken into account (see paragraph 4.5 and Section 38).

It is the third Method you must try. It is based on the customs value of similar goods exported to the EC at or about the same time as the goods to be valued.
5.2 What is meant by similar goods?

These are goods which differ in some respects from the goods being valued but they: are produced in the same country
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can carry out the same tasks, and are commercially interchangeable.
Where similar goods are not made by the producer of the goods to be valued, you can use similar goods produced by a different person.
5.3 What if there are no similar goods?

This rules out Method 3. You now have a choice to either try Method 4 (explained in Section 6) or Method 5 (explained in Section 7).
5.4 What are the conditions for using Method 3?

The conditions are the same as for Method 2; see Section 4.

It is the fourth Method you can try. It is based on the selling price of the goods in the EC. Remember that Method 5 can be tried before Method 4 if you wish.

The customs value is based on the price of each item (unit price) at which: the imported goods identical imported goods (see paragraph 4.2), or similar imported goods (see paragraph 5.2),
are sold in the EC in the condition as imported to customers unrelated to the seller. The unit price must relate to sales in the greatest aggregate quantity (see paragraph 6.6) at or about the time of the importation of the goods to be valued. You must be able to produce details of the sales in the greatest aggregate quantity at the time of entry into free circulation. In the UK this is known as Method 4(a).
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6.3 What if there is no sale at or about the time of importation?

You can base the customs value on the unit price of the actual sales of the imported goods that take place up to 90 days after importation. As you cannot establish the customs value until the goods have been sold you must request release against a deposit (see paragraph 2.5). In the UK this is known as Method 4(b).
6.4 What if the goods are not sold in the EC in the condition as imported?
If you want to, you can base the customs value on the price at which the goods are sold after processing. But you cannot do this if the goods: lose their identity (unless you can accurately and easily establish the value added by the processing), or keep their identity but form a minor part of the goods sold.
6.5 What if there are no sales to unrelated persons in the EC?

This rules out Method 4. You must try Method 5 (explained in Section 7) if you have not already considered it. Otherwise go to Section 8.
6.6 How do I arrive at the sale in the greatest aggregate quantity?

You add together the number of items sold at each price. The largest number of items sold at one price is the greatest aggregate quantity. See Section 39 for examples.
6.7 What deductions must I make from the unit price?

You must deduct the following:
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either the commissions usually paid or agreed to be paid or the addition usually made for profit and general expenses in connection with sales in the EC of imported goods of the same class or kind the usual costs of transport, insurance and associated costs incurred within the EC, and EC customs duties and internal taxes payable in the country of importation.
Also if the goods are sold after processing (see paragraph 6.4) deduct the value added by the processing carried out in the EC.
6.8 Can I deduct my actual profit and general expenses?

Yes unless your figures are out of line with those usual for sales in the EC of imported goods of the same class or kind.
6.9 What if Customs challenge the deduction I have made?

We will produce other relevant information relating to additions for profit and general expenses made by importers of goods identical or similar to those to be valued. Therefore you should have available information to show that the deduction you have made is usual by comparison with importers within your trade sector. Because this is a complex subject we recommend that you contact the Helpline to agree a deduction before you begin importing the goods concerned.
6.10 What is meant by goods of the same class or kind?

This term means goods which fall within a group or range of goods produced by a particular industry or sector of industry. It includes identical (see paragraph 4.2) and similar (see paragraph 5.2) goods. The goods need not have been imported from the same country as the goods being valued.
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6.11
What evidence must I produce?

Method 4(a). You must produce with the import entry one of the following showing the unit price in the greatest aggregate quantity: a sales invoice a price list current at the time of importation (for importations of sheepmeat carcases from Australia and New Zealand see Section 40), or other evidence as agreed with us.
Unless an overall percentage deduction has been agreed with us, we also need details of the actual deductions claimed. Method 4(b). At the time of importation. You must give a reasonable estimate of the final sales value for deposit purposes (see paragraph 2.5). This estimate must be supported by a pro-forma invoice, statement of value or other evidence. For importations of fresh fruit and vegetables and cut flowers see Section 41. Adjusting the deposit. You do not have to wait until all the goods are sold to establish the customs value. Once you have sold enough to arrive at the unit price you must send copies of the sales invoices and a copy of your calculations to NIDAC. Unless an overall percentage deduction has been agreed with us, we will also need details of the actual deductions claimed. Duty will either be taken to account, refunded or called for (see paragraph 2.5).
In the fresh fruit and vegetable and cut flowers trade the account sales procedure may be used as a basis for arriving at the duty payable (see Section 41 for more information).

It is the fifth Method you can try. It is based on the costs of production of the goods. Usually it can only be used where the importer and supplier are related (see paragraph 3.10). Remember you can try this Method before Method 4 if you wish.

The customs value is a built-up value. It is based on the sum of the following:
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the cost or value of materials and fabrication or other processing used in producing the imported goods including: the items detailed in paragraph 3.15(d) if supplied by the buyer, directly or indirectly. Even if the work listed in paragraph 3.15(d)(iv) is carried out in the EC you must include the value of the work in the customs value if you charge the producer of the goods to be valued for that work; and containers and packing (see paragraph 3.15(e)) an amount for the producers profit and general expense, plus the cost of transport, insurance and loading or handling connected with delivering the goods to the EC border.

You must be able to get information about the cost or value of the items in paragraph 7.2. This information must be based on the producers commercial accounts. These accounts must follow the general principles of accounting, which apply in the country where the goods are produced.
7.4 What other evidence is required?

You must also be able to get information about the producers profit and general expenses. The amount to be added must be in line with the usual figures for profit and general expenses for producers in the country of exportation of the goods: of the same class or kind (see paragraph 6.10), and for export to the EC.
7.5 What if Customs challenge the producers figures for profit and general expenses?
We will produce other relevant information relating to figures for profit and general expenses reflected in sales by other producers who export to the EC. Such figures will relate to producers of identical or similar goods in the same country of export as the goods to be valued.
7.6 What if I cannot get this information?

This rules out Method 5. If you have already unsuccessfully tried Method 4 (explained in Section 6) you must now use Method 6 (explained in Section 8).
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7.7 Can I get help to work out this Method?

Yes, but we know from experience that this Method is difficult and therefore is rarely used. For further advice you should contact the Helpline.

It is the final Method and is called the fall-back Method.

You must arrive at the customs value by using reasonable means consistent with the WTO Valuation principles. You do this where possible by adapting Methods 1 5 flexibly to fit unusual circumstances: Examples Methods 2 or 3. The customs value could be based on the transaction value of identical or similar imported goods produced in a country other than the country of exportation of the goods being valued. Method 4(b). The 90 days limit for sales could be extended. The customs value could be based on the price that would have been paid for the goods if they had been purchased (perhaps by reference to the export price list for sales to the EC issued by the supplier). This approach would be consistent with WTO valuation principles.

This depends on which Method is being flexibly used. For further advice you should contact the Helpline.
9. Simplified Procedure Values (SPVs) 9.1 What are SPVs?

They are customs values derived from prices realised on sales in specified marketing centres within the EC. A variety of deductions are made from these prices to arrive at an average sterling value per 100kg net for each product covered by the scheme.
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9.2 What fruit and vegetables does the scheme cover?

A list is given in Section 42. Importers connected to CHIEF can obtain these details from the relevant data files.
9.3 When can I use SPVs?

You can only use the SPV scheme for whole fruit and vegetable produce, of a single kind, imported on a consignment basis. Excluded from the scheme are fruit or vegetable products that have undergone a cut & dicing process prior to importation. You can not use the SPV system if there is a transaction value. The goods must be valued using Method 1.
9.4 Can I change my mind about using the SPV scheme during a calendar year?
Yes, there are no restrictions on changing between SPVs and other valuation Methods during that year. Remember that if there is a transaction value, Method 1 must always be used. NOTE. Once the goods have been entered to SPVs you can never have the entry amended to, for example, Method 4(b) nor may goods be entered against security pending a choice between SPVs and any other Method.
9.5 How often do the SPVs change?

Fortnightly, starting midnight Thursday/Friday.
9.6 How can I find out the current SPVs?

A list of the values is available on the CHIEF Noticeboard. The Fresh Produce Consortium (UK) is also told the values for the benefit of their members. The SPV to be used is the value applying when the import entry is accepted by us. NOTE. When a SPV rate is not available to use as the basis of value you must use Method 4(b) to value goods imported on consignment.
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9.7 Can I get a refund of duty on goods which are received in a state unfit for human consumption or have to be destroyed?
Yes, if you can show that 5% or more of the consignment was unfit for human consumption (before entry into free circulation). Duty will be refunded on that part of the consignment which is unfit for human consumption. Section 8 of Notice 199 Imported goods: Customs procedures and Customs debt, gives you advice on repayments.
9.8 What if the goods are received in a damaged state?

If you can show that the damage occurred before entry into free circulation and the value of the consignment has decreased by at least 20% the SPV rate will be apportioned accordingly. Example If the value of the consignment has decreased by 40%, the customs value will be based on 60% of the SPV.

You must show by what percentage the goods were damaged or unfit for human consumption before they were released from our control. This must be done by producing a statement from: our officer who examined the goods the Port Health Official, or an independent expert such as an insurance assessor or a surveyor who is acceptable to us.
10. Entry price system - Standard Import Values (SIVs) 10.1 What is the entry price system?
The entry price system applies to the fruit and vegetables. The periods of application are listed in the Annex to Commission Regulation 1580/2007. Further details can be found in the Customs Tariff, Volume 2, Section 11.
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For each product covered by the system the Tariff indicates a scale of entry prices per 100 Kg net. At the highest point on the scale the Tariff indicates an ad valorem rate of duty only. As you proceed down the scale specific charges are introduced. Thus the lowest entry price generates the highest specific charge in addition to the ad valorem duty.
10.2 How do I decide which entry price applies?

You have a choice of the following: (a) the FOB price of the products in their county of origin plus delivery costs (freight and insurance) to the EC border, where that price and those costs are known at the time the customs declaration is made NOTE. For goods listed in the Annex, where the FOB price, (plus the costs at 10.2(a)), is greater by more than 8% of the SIV price (see (c) below) applicable at the time of entry to free circulation for the product being valued, you must lodge security. The amount of the security is the additional duty due if the SIV had been used. This will only apply if the SIV is below the threshold entry price. (b) the customs value calculated in accordance with Method 4(b) (see paragraph 6.3). The value declared for deposit purpose must be a reasonable estimate of the final value NOTE. At the time of importation you must lodge security equal to the amount of duty that would have been paid if you had chosen the SIV (see (c) below). (c) the Standard Import Value (SIV). SIVs are arrived at by the EC Commission in exactly the same way as SPVs and are per 100 Kg net. SIVs change daily at midnight. If you are connected to CHIEF you can obtain details from the relevant Notice Board. NOTE. When an entry price is in force for particular types of fresh fruit and vegetables, the SPV for those products is suspended and not available as the basis of value.
10.3 What value do I use to calculate the duty payable?

You must use the same value as you chose to determine the entry price (see paragraph 10.2). NOTE. When you have made your choice at the time of entry to free circulation, you cannot change your mind and request that the entry is amended.
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10.4 Where security is required, how do I obtain release of that security?

You have one month from the sale of the products to prove that they were disposed of under conditions which confirm the price (in accordance with paragraph 10.2(a)) or the customs value (in accordance with paragraph 10.2 (b)). This is subject to a limit of four months from the date of acceptance of the entry to free circulation. However, you may ask Customs (NIDAC) for an extension of up to three months to this limit. Failure to meet one or other of these deadlines will result in the loss of the security. The security lodged will be released to the extent that proof of the conditions of disposal is provided to the satisfaction of Customs (NIDAC). Otherwise the security will be forfeit to pay the duties.
11. Frozen meats in round sets 11.1 What is frozen meat in round sets?
Frozen meat is often imported in what is commercially described as frozen round sets. These consist of several different cuts of meat invoiced at a unit price per ton. The cuts differ in value, but this may not be shown on the invoice.
11.2
Which valuation Method do I use?
You must try Method 1, based on the alternatives outlined in Section 43.
11.3 What if there is no price paid or payable?

For further advice you should contact the Helpline if you are unable to use Method 1.
12. Valuing free of charge goods 12.1 Can I use Method 1?
Not normally, because there is no price paid or payable by you to the supplier. But you may be able to use Method 1 where: the goods have been the subject of an earlier sale (perhaps to the supplier), or you are importing the goods pre-sold; and you can produce evidence of that sale.
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See paragraph 19. 4 about completing and signing valuation declarations.
12.2 If I cannot use Method 1, how else can I arrive at the customs value?
You can try: Methods 2 or 3 (see Sections 4 or 5) if you import or have knowledge of imports of identical or similar goods under Method 1 Method 4 (see Section 6) if you sell the goods or identical or similar goods to unrelated customers in the EC, or Method 5 (see Section 7) if you can get the detailed costings.
12.3 What if I cannot use any of these Methods?

You must use Method 6 (see Section 8). The customs value can be based, for example, on the price you would have paid the supplier if you had bought the goods. You must add or leave out the items detailed in paragraphs 3.15 and 3.16 as appropriate.
12.4 What evidence must I produce under Method 6?

A copy of the suppliers current export price list for goods sold to the EC a statement from the supplier of the value of the goods, or other evidence as agreed with us.
13. Valuing free of charge replacement goods 13.1 Replacement goods in the same shipment
If the supplier includes in the shipment a quantity of items free of charge as replacements for goods likely to be defective or damaged in transit, the contracted sale price is regarded as covering the total quantity of items shipped.
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13.2 Replacement goods in a subsequent shipment

The customs value is determined in accordance with paragraphs 12.1 and 12.2. However, you can ask Customs to amend the customs value of the original shipment in accordance with the contractual arrangements.
14. Valuing used goods 14.1 Second-hand goods which were not used by you before entry into free circulation
You have to follow the rules set out in Sections 3 8. No special treatment is necessary.
14.2 Goods acquired new or used and used or further used in a third country before entry into free circulation
Where the period and extent of use between being acquired and entry into free circulation results in the goods being worth less at time of entry into free circulation than when acquired, you need not use Method 1. You can try: Methods 2 or 3 (see Sections 4 or 5) if you import identical or similar goods of the same age and in the same condition under Method 1, or Method 4 (see Section 6) if you sell the goods or identical or similar goods to unrelated customers in the EC.
If you cannot use any of these Methods you must use Method 6. The customs value can be based on the value of the goods when acquired less an amount for loss of value due to the usage.
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15. Valuing rented or leased goods 15.1 How do I arrive at the Customs value?
When you import goods that you have rented or leased, there will be no sale between the supplier and yourself. However, prior to being rented or leased, the goods may have been subject to a sale. Thus it may be possible to use Method 1 (see paragraph 3.5). Otherwise Methods 2 to 5 (see Sections 4 7) should be tried. Nevertheless, in most cases, Method 6 will be appropriate (see paragraph 15.3).
15.2
Can I use a cash price?
Sometimes a cash price is quoted in the rental or leasing agreement in case you wish to purchase the goods at a later date. However, this cash price may be artificially high to encourage the renting or leasing of the goods. Alternatively it may be an option to buy when the goods are effectively second hand. Thus such a cash price does not constitute a sale and cannot be used under Method 1.
15.3 6?
How do I arrive at a value using Method
You multiply the annual rental or leasing cost by the expected economic life of the imported goods. Where the rental or leasing cost includes interest it is necessary to calculate the cash price of the goods. This is done by using a formula. There are two formulae which can be used, depending on whether payment is made in advance or arrears. Further information about the formulae is provided in Section 44. For further advice you should contact the Helpline where it is difficult to determine the expected economic life of the imported goods.
16. Goods lost, damaged or defective 16.1 What this Section covers
Notice 266 Rejected imports: repayment or remission of duty and VAT gives details of the duty relief provisions. This Section is intended to cover the cases when those provisions cannot be used.
16.2 What if I do not receive all of my goods?

No duty is due on any goods shown to have been short-shipped or lost in transit before release from customs charge into free circulation.
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16.3
What if the goods are damaged?
If you can prove to us that damage occurred before the goods were released from customs charge into free circulation, you can ask for the customs value to be amended. See paragraph 9.8 for goods entered under the SPV scheme.
16.4


a credit note from the seller a statement from the Customs officer who examined the goods a certificate of condemnation a statement from the Port Health official a statement from an independent expert such as a surveyor, or details of settlement of claim against insurer or carrier.
We cannot list all acceptable forms of evidence but some examples are:
But see paragraph 9.8 for goods entered under the SPV scheme.
16.5

How do I arrive at the customs value?

apportioning the original price paid or payable to take account of partial loss or damage using the revised price paid or payable where the seller reduces the price as a result of the loss or damage, or comparing the price at which you sell the damaged goods with the published average market values for the same type of goods at the time of sale, and using the ratio to apportion the invoice price.
Depending on the evidence you can produce you can do this by for example:
16.6 What if the goods are found to be defective after importation?

If the defects are repaired, and the seller reimburses you under warranty for the cost of the warranty work carried out by you or on your behalf, you can submit a claim for repayment of duty to Customs National Duty Repayments Centre.
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16.7
You must:
(a) provide full details of the contractual arrangements covering the warranty work that have been agreed between you and the seller of the imported goods (b) show that the seller has accepted responsibility under the warranty for the defects in respect of the particular goods in question and agreed to make the reimbursement for the warranty work (c) provide a clear audit trail to show that you have been reimbursed for the postimportation warranty work required on the imported goods which evidences and links: the discovery and nature of the defect (including sufficient details to identify the goods concerned) the repair work undertaken and the cost the reimbursement of the repair cost by the seller in accordance with the terms of the warranty, (if details are not available demonstrate how the precise amount for the repair cost has been calculated and that the seller or warrantor has accepted liability for that amount), and
(d)
provide details of the customs entry for the goods in question.
16.8
How do I calculate the amount I claim?
You must calculate the amount of customs duty that would have been paid if the customs value of the imported goods had been reduced by the amount of the reimbursement you receive from the seller of the goods and deduct this amount from the duty that was actually paid. You can claim the difference.
16.9
Are there any time limits?
Yes. There are two time limits which must both be met if you are to make a claim. You must ensure that: the amount of the reimbursement is adjusted within 12 months from the date of acceptance of the customs entry that resulted in the duty being paid on the goods being repaired, and the claim is submitted within 3 years of the date of the acceptance of the customs entry that resulted in the duty being paid on the goods being repaired.
For example, where a consignment was imported on 1 June 2007 and an adjustment was made on 1 April 2008, a claim can be made to cover the cost of repairs reimbursed under warranty if submitted before 1 June 2010.
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16.10
Are there any other conditions?
Yes, the amount claimed under these arrangements for any specific imported item may not exceed the original declared value of that item resulting in a negative value. NOTE. Customs reserves the right to carry out any appropriate verification enquiries and to request access to any relevant documentation before claims are processed.
17. Delivery costs 17.1

These are: the cost of transport the cost of insurance (including global or blanket policies) loading and handling charges container charges (for example when hired for transportation of the imported goods) terminal charges (charges for a variety of services in connection with the handling/storage of freight containers at container depots), and any other charges involved in carrying the goods from one place to another.
What are delivery costs?
17.2 Are all of the costs to be included in the customs value?

No. Only costs up to the place of introduction of the imported goods into the customs territory of the EC are to be included. Remember you must include in the customs value all inland transport and associated costs in the country of export.
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17.3
Where is the place of introduction?

Sea If the goods are delivered direct to the UK the place of introduction is the port of importation into the UK. If the goods are delivered to another member state before being sent to the UK the place of introduction is the port of unloading in that member state. If the goods are transhipped within the EC the place of introduction is the port of transhipment. (This is subject to transhipment being certified by Customs at that port). Air The place of introduction is the point where the EC border is first crossed during the air journey. Road, Rail or Inland Waterway The place of introduction is the point where the goods first pass a Customs office on EC territory.
This is usually the point when the goods cross the EC border. Post The place of introduction is the address for delivery, for example your office or home.
17.4 Can I deduct EC transport costs where they are included in the total freight charge?
Yes. If the freight is charged separately and distinguished, the freight charge can be apportioned to arrive at the value for the journey after the EC border. For goods transported by sea the freight charge that would have been paid to the place of introduction is to be included in the customs value. Rates shown in rate books or otherwise advertised by the shipping line or other carrier are usually acceptable. For goods transported by rail or road the freight charge is to be apportioned using reasonable means for example by distance covered outside and inside the EC. Section 45 gives other examples. The percentage of the air transport costs shown on the air waybill to be included in the customs value is set out in an EC Regulation. The percentages are listed in Section 46. Importers connected to CHIEF can obtain details from the relevant data files. Remember locally agreed rates for EC transport costs for VAT purposes must not be used for ad valorem customs duty calculations.
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17.5 Can I deduct EC transport costs where they are included in the price I pay for the goods?
Yes, a deduction for these charges may be made from the price you pay, provided they can be distinguished and evidence can be produced to support them. Section 45 gives examples. The following would be acceptable as evidence: the amount shown separately on the sellers invoice a certified statement or telex from the supplier an invoice or certified statement of the actual freight amount charged by the carrier to the buyer, seller or agent an invoice or certified statement establishing the total cost of transport, split to show the proportion of actual distance inside and outside the community a statement from the buyer referring to a schedule of freight rates normally applied for the same mode of transport, or in the case of goods imported by air, a statement on the invoice confirming that the cost of freight included in the price is the same as that stated on the air waybill.
17.6 What if the transport is free or I provide my own transport?

You must include in the customs value an amount for transport costs to the EC border. You can calculate this amount by using the freight rates tariff for the type of transport used, for example IATA rates for air transport costs, or conference rates for sea.
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17.7 Is the cost of insuring the goods against loss or damage in transit to be included in the customs value?
Yes. You must include the cost of insurance for the goods up to the place of introduction into the Customs Territory of the EC. However, if you pay a premium which covers the whole journey, the cost of insurance after the EC border does not have to be included in the customs value provided you separately distinguish this element. Also, where there is separate cover for the journey after the EC border, the cost of this separate insurance cover does not have to be included in the customs value. Remember if your insurance covers more than one importation, or relates to other items as well as the imported goods, the cost of that insurance must be apportioned and the appropriate amount included in the customs value. An example of how to apportion a periodic insurance premium to individual consignments is provided in Section 45.
17.8 Can I leave out container terminal costs?

Yes, if they are separately charged and are for a container terminal in the EC.
17.9
Can I leave out demurrage charges?
Yes, if the charge is made as a result of delay after arrival of the goods at the place of introduction. But charges for delay before arrival of the goods at the place of introduction are to be included in the customs value.
17.10 Can I use surface freight costs when goods are sent by air?
In normal circumstances, no. However, where the contractual arrangements between buyer and seller: (a) are in force at the time of entry of the goods concerned to free circulation
(b) require the seller to have the goods transported by air to ensure agreed delivery deadlines are met, and (c) the seller has to bear the additional costs, the following treatment will apply:
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if the terms of the original order were CIF or post CIF, then the terms change to CIP (Carriage & Insurance Paid To) and the air transport cost is considered to be included in the CIP price. No further addition for transport and associated costs is required if the terms of the original order were FOB, those terms change to CIP or CPT (Carriage Paid To). The CIP or CPT price is considered to include the air transport cost. No further addition for transport and associated costs is required unless any further costs are incurred by the buyer, for example, for insurance or if the buyer makes a contribution towards the additional air transport costs (for example by paying an amount equal to what it would have cost to transport the goods by sea). In which case those costs have to be included in the customs value.
In either case, the cost of transport within the EU can be excluded from the customs value in accordance with Article 166 and Annexe 25 of Commission Regulation 2454/93 (apportionment of airfreight costs), provided the airfreight costs are shown separately on the invoice, or can be evidenced by alternative satisfactory means. NOTE. You should contact our Helpline for further information if consignments are shipped late on a regular basis.
17.11 Can I leave out a currency adjustment factor?

Where an additional charge is billed by an agent, rather than the shipping line/carrier of the goods, it may be left out of the customs value, subject to evidence being produced to substantiate the actual total cost of transporting the goods. In all other situations the charge is dutiable.
17.12 Can I leave out a bunker adjustment factor?

No. This surcharge is raised by shipping lines to take account of fluctuations in the price of marine fuel. A similar fuel surcharge is applied where goods are transported by air to compensate for fluctuations in the price of aviation fuel.
17.13 Should any other transport surcharges be included in the customs value?
Yes, the following surcharges are considered to be part of the cost of transporting the goods to the place of introduction in the EU and must be included in the customs value: Peak season surcharge
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Security surcharge War risk surcharge UK Port Congestion charge.
In addition any other payment or surcharge charged by the shipping line, airline or carrier of the goods, which does not relate to a cost incurred, or an activity or operation taking place after the arrival of the goods at the place of introduction must be included in the customs value of the goods. NOTE: Where the surcharge is made in connection with transport by air, it may be included in the total air transport costs declared for apportionment purposes.
18. Rates of exchange conversion of foreign currency 18.1 What must I do if all or part of any amount to be taken into account in arriving at the customs value is shown in a foreign currency?
You must convert to sterling any foreign currency amount which needs to be taken into account in arriving at the customs value. Also you must convert to sterling any other part of the customs value shown in foreign currency, for example, freight or insurance.
18.2 Can I use the rate of exchange at which I make settlement?

No. Unless paragraphs 18.3 or 18.5 apply.
18.3

Can I use a fixed rate of exchange?

the contract of sale specifies that a fixed rate of exchange is to be used to convert a foreign currency amount to sterling, and the seller is to receive payment in sterling.
You should use the fixed rate when:
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18.4 What if the supplier requires payment in a foreign currency?

If the invoices are in sterling at a fixed rate of exchange quoted in the contract of sale, that rate of exchange must be used to convert the sterling amount into the foreign currency. The resulting foreign currency amount must be reconverted to sterling at the customs rate of exchange applicable at the time of importation (see paragraph 18.5).
18.5
Which rate of exchange must I use?
If paragraph 18.3 does not apply you must use the rate of exchange published by us for use at the time the entry to free circulation is accepted. However, for periodic declarations, you may ask us to accept a single exchange rate based on the rate applicable on the first day of the period covered by the declaration in question.
18.6
How are the customs rates designated?
The monthly rates are fixed under provisions set out in EC legislation. (See the correlation table at paragraph 26.5).
18.7
When are the rates published?
At the end of every month we publish the rates on the Internet and on the CHIEF Noticeboard. These give the rates of exchange to be used during the next month for converting foreign currencies for duty and import VAT purposes.
18.8
What period do the rates cover?
From the first to the last day of the next calendar month.
18.9 What happens when there are sudden currency fluctuations?

Once a week we check the monthly rates issued against the commercial selling rates on the London Exchange Market. If the commercial rate for a currency differs by more than 5% from the last published customs rate, the customs rate is amended from midnight on Tuesday/Wednesday of the following week.
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18.10 Where can I get details of Customs rates of exchange?

From our Helpline. Current and historical exchange rates are available on our website Importers connected to CHIEF can obtain details of Customs rates from the relevant data files.
19. Valuation declarations and statements 19.1 What is a valuation declaration?
It is a form that gives information to us about the value declared on the import entry. There are two forms: form C105A to be completed when using Method 1 (see Section 3), and form C105B to be completed when using Methods 2 6 (see Sections 48).
19.2 Must I complete a valuation declaration?

No, not unless we ask you to.
19.3 When will I be asked to complete a valuation declaration?

We may ask you to complete a form C105A or C105B for import declarations we examine on a post importation audit.
19.4 Who can sign the valuation declaration?

Forms C105A and B can be signed by any person (natural or legal): residing or having a place of business in the EC, and who has the information needed to answer the questions on the forms.
Where the forms are completed for a company, the person signing must be a responsible representative of the company, for example: Director
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Company Secretary, or Manager.
One of these persons may authorise an employee to sign for the company. Clearing agents may also sign these forms on behalf of the importer when authorised to do so. NOTE. The person signing a declaration is responsible for the accuracy and completeness of the particulars given on the form and must be in possession of all the facts relating to the sale upon which the declared customs value is based .
19.5
What is a general valuation statement?
It is a season ticket valuation declaration, form C109A, which is normally valid for three years (but see paragraph 19.9).
19.6 When will a general valuation statement be required?

We require you to complete form C109A only when using Method 1 and the value is based on an earlier sale (see paragraph 3.5). The form can be obtained from our Helpline.
19.7 Who can sign the general valuation statement?

Form C109A must be signed by the importer not by an agent or other representative. The signatory must be a responsible representative of the company such as: Director Company Secretary Manager Partner, or Sole Proprietor.
A form signed by an employee authorised to sign on behalf of the company must be accompanied by a letter of authority signed by one of the accepted signatories.
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19.8
How do I register a form C109A?
Send the completed form C109A, with a copy, to the General Valuation Registration Unit at the address shown in the Notes at the head of the form. When the form has been registered, a copy will be returned to you, together with your reference number. You or your clearing agent may put this reference number in box 44 of the import entry when the terms of your general valuation statement apply to the relevant consignment.
19.9 When must the general valuation statement be renewed?

If there are any changes to your registration details or terms of trading, you must notify the General Valuation Registration Unit. We will advise you if a new application form is required. Otherwise, a reminder will be issued to you three years after the date of registration.
19.10 Where can I find out more about valuation declarations and statements?
Contact the Helpline.
20. Customs warehousing 20.1 What value must I declare at the time of importation?
You must declare a value for statistical purposes (see Section 25). This value will also be used for warehouse stock control purposes.
20.2 How do I arrive at the customs value when the goods are removed to free circulation?
You do this by using one of the 6 Methods set out in Sections 3 8 or SPVs and SIVs (Section 9) for fresh fruit and vegetables.
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20.3 When using Method 1 must I base the customs value on the last sale before removal?
No. It may be based on any of the prices paid by any buyer in a series of sales before entry of the goods into free circulation. This includes any sales in the warehouse. The buyer may be outside the EC. (See paragraph 3.4). But see paragraph 19. 4 about completing and signing valuation declarations.
20.4 When must I establish the customs value of goods removed from warehouse to free circulation?
At the time the goods are removed from the Customs warehouse. This means that any elements making up the value for duty (for example price, freight and insurance charges) which are invoiced in a foreign currency will have to be converted to sterling at the customs period rate of exchange (see paragraph 18.4) in force at the time the goods are entered for removal from the warehouse. (Exception: In the case of goods entered to type D Customs warehouses the customs value is established at the time of entry of the goods to the warehouse. However, you have the option of using the rate of exchange applicable when the goods are removed from the Customs warehouse at the time when the customs debt is incurred.)
20.5 Can I leave out of the customs value the cost of warehousing and/or preserving the goods?
Yes, providing it is shown separately from the price of the goods.
20.6 Where can I find out more about Customs warehousing?

In Notice 232 Customs Warehousing.
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21. Outward Processing Relief (OPR) 21.1 How do I arrive at the customs value of goods reimported after process outside the EC?
(a) The processor charges you for the cost of the process. You must try Method 1 (see Section 3 particularly paragraph 3.15(d)). The customs value will be based on the cost of the process. All of the following items must be included in the customs value if not already in the processors charge: the value of the exported goods (where the goods are purchased from an unrelated person, the cost of acquisition is to be used. Where the goods are produced by yourself or a related person, the cost of production is to be used) the value of any material rejected, lost or wasted before, during or after the process, and any third country customs duty or similar levy.
Outward freight and insurance are not to be included in the built-up value. The exception to this is when the temporarily exported goods are invoiced CIF and the outward freight and insurance is not separately distinguishable. Then the outward freight and insurance is includible in the built-up value. (b) The processor does not charge you for the cost of the process.
As no payment is made Method 1 cannot be used. You must try either: Methods 2 or 3 (see Sections 4 or 5) if you import identical or similar processed goods under Method 1 Method 4 (see Section 6) if you sell the processed goods or identical or similar processed goods to unrelated customers in the EC Method 5 (see Section 7) if you can get the detailed costings of the processed goods, or Method 6 (see Section 8) if you cannot use any of these Methods. The customs value can be based on the charge that would have been made for the process. Additions have to be made as detailed in (a) above.
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21.2
Where can I find out about this relief?
In Notice 235 Outward processing relief (OPR).
22. Standard Exchange System (SES) 22.1 How do I arrive at the customs value of the imported replacement products?
Charge made for the replacement products. You must try Method 1 (see Section 3). The customs value will be based on the charge made for the replacement products. If this charge has been reduced to take account of the value of the exported goods, you must add back the amount of the reduction to arrive at the customs value. If you do not know the amount of the reduction you must include in the customs value the FOB export value of the exported goods. No charge made for the replacement products. No duty is due on goods which have been repaired or replaced free of charge under warranty or similar arrangement. Relief is allowed on all costs involved including outward and return freight and insurance.
22.2
Where can I find out about this system?
In Notice 235 Outward processing relief (OPR).
23. Inward Processing Relief (IPR) 23.1 How do I arrive at the customs value of the goods?
You do this at the time the goods are entered to the relief by using one of the 6 Methods set out in Sections 3 8.
23.2
Where can I find out about this relief?
In Notice 221 Inward processing relief (IPR).
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24. Valuation for VAT 24.1 What is the basis of the value for VAT?
You must base it on the value for duty even if no duty is payable.
24.2 What items must I add to the value for duty to arrive at the value for VAT?
You must add all of the following unless they are already included: all incidental expenses such as commission, packing, transport and insurance costs incurred up to the goods first destination in the UK all such incidental expenses where they result from transport to a further place of destination in the EC if that place is known at the time of importation any customs duty or levy payable on importation into the UK, plus any excise duty or other charges payable on importation into the UK (except the VAT itself).
NOTE. Buying commission has to be included in the value for VAT.
24.3
Must I include royalty or licence fees?
No. These are regarded as charges for services received from outside the EC. VAT is due on such payments at a later stage. Notice 741 VAT: Place of supply of services, gives you information on how to account for such supplies.
24.4 Must I include a discount for prompt payment?

No. Provided at the time of import a discount for early payment is still available.
24.5 What must I do if the price of the goods is in foreign currency?

You have to convert the foreign currency into sterling. Also you must convert to sterling any other part of the value shown in foreign currency for example transport, insurance etc. You must use the rules set out in Section 18.
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24.6 Are there any special arrangements for certain goods?

Yes. Hydrocarbon oils and certain racehorses Standard values have been agreed for certain goods, such as racehorses imported for auction and hydrocarbon oils. You can get details from your Trade Associations. Certain imported works of art, antiques and collectors items These are entitled to a reduced valuation at importation, giving an effective VAT rate of 5%. Details of how to calculate the reduced valuation are given in Notice 702 VAT: Imports. Computer software Details of how to value computer software is given in Notice 702 VAT: Imports. Goods reimported after process or repair abroad Details are given in Notice 702 VAT: Imports.
24.7 How do I arrive at the value for VAT when imported goods are removed from a Customs warehouse?
You follow the procedures for customs value set out in Section 19.11 and the value rules set out in this Section. NOTE. The treatment of services performed in a Customs warehouse or an Excise or Customs and Excise warehouse (see paragraph 24.9) may affect the declared VAT value.
24.8 How do I arrive at the value for VAT when imported goods are removed from an Excise or Customs and Excise warehouse?
Details are given in Notice 179 Mineral (hydrocarbon) oils: Duty and VAT: Warehousing and related procedures for hydrocarbon oils, and Notice 197 Excise goods: Holding and movement for other Excise goods.
Do not forget you have to include excise duty in the value.
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24.9 VAT?
What if I cannot arrive at the value for
You can ask for release of your goods against a security, that is to say a deposit or a guarantee (see paragraph 2.5).
24.10 Where can I find out more about valuation for VAT on imports and warehoused goods?
In Notice 702: VAT: Imports and Notice 702/9 VAT: Warehouses and free zones.
25. Value for trade statistics 25.1 What value must I show for goods on which ad valorem duty or levy is charged?
The customs value arrived at by using the rules set out in Sections 3 8.
25.2 What value must I show for other goods?

The price paid or payable for the goods (see Section 3). You may need to add or deduct certain costs (see paragraphs 25.3 and 25.4).
25.3 What items must I add to the price paid or payable?

You must add all of the following to the price you pay unless they are already included: freight insurance all other costs, charges and expenses connected with the sale and delivery of the goods to the port or place of importation in the UK, and selling commission.
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25.4 Must I leave out any items from the value for trade statistics?
Yes. The all of the following must be left out: buying commission selling commission incurred within the UK cost of transport within the UK, and duty or tax chargeable in the UK.
25.5 What if there is no price paid or payable?

You have to arrive at a value using the rules set out in Sections 3 8. You must add the items listed in paragraph 25.3 if they are not already included. Also you must leave out the items listed in paragraph 25.4.
25.6 What if the goods have been processed or repaired outside the UK?
You need to include the cost of the process or repair and the value of the goods when exported.
25.7 What must I do if the price or value of the goods is in foreign currency?
You need to convert the foreign currency amount into sterling (see Section 18).
25.8 Where can I find out more about the value for trade statistics?
In the Tariff, Volume I, Part 14, paragraph 2.7 (for imports) and paragraph 3.1 (for exports).
26. Law 26.1 Customs valuation

Title OJEC No and date
Regulation Number
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Council Regulation (EEC) No 2913/92 Commission Regulation (EEC) No 2454/93 as amended by: Commission Regulation (EC) No 3254/94 Commission Regulation (EC) No 1762/95 Commission Regulation (EC) No 1676/96 Commission Regulation (EC) No 1677/98 Commission Regulation (EC) No 46/99 Commission Regulation (EC) No 444/02 Commission Regulation (EC) No 881/03 Commission Regulation (EC) No 215/06
Establishing the Community Customs Code Provisions implementing the Community Customs Code
L302 19.10.92 L253 11.10.93
L346 31.12.94 L171 21.07.95 L218 28.08.96 L212 30.07.98 L10 8.01.99 L68 12.03.02 L134 29.05.03 L38 9.02.06
26.2 Entry price system - standard import values

Regulation Number Commission Regulation (EC) No 1580/2007 OJEC No and date L350/1 31.12.07
26.3
Valuation for VAT
VAT Act 1994 Section 21. EU Principle VAT Directive ( 2006/112/EC).
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26.4
Value for trade statistics

OJEC No and date L118/10 22.05.95 L114/7 7.05.96 L229/14 7.09.00
Regulation Number Council Regulation (EC) No 1172/95 Commission Regulation (EC) No 840/96 Commission Regulation (EC) No 1917/00
26.5
SUBJECT METHOD 1 Method 1
Correlation table
NOTICE 252 SECTION 3 3.1 3.2 3.3 3.4 3.5 3.6 3.9 29(1)(a) & (b) 29(1) 29(1) 30(1) 29(3)(a) 29(1) Annex 23 Note Articles 147 & 178 Articles 181 & 181(a) Annex 23 Note Article 148 3.10 3.11 3.12 32(1)(a)(i) 29(1)(d) & 29(2)(a) to (c) Annex 23 Note Article 143 Annex 23 Note Article 147 Annex 23 Note Annex 23 Note REGULATION (EEC) REGULATION (EEC) No.2913/92 Article No.2454/93
Transaction value No sale Price paid Successive Sales Evidence Conditions ) Restrictions ) Related Parties Relationships Selling Agent Branch Office Settlement
3.13
29(3)(a) 29(3)(a)
Annex 23 Note
Method of Payment 3.14
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SUBJECT ADDITIONS Delivery Costs Commissions Royalties
NOTICE 252
REGULATION (EEC) REGULATION (EEC) No.2913/92 Article No.2454/93
3.15 (a) (b) (c)
32(1)(e) 32(1)(a)(i), 32(4) & 33(1)(e) 32(1)(c) 32(5)
Articles 163 to 166
Annex 23 Note Articles 157 to 162 Annex 23 Note Article 155 Article 154
Assists Containers and Packing
(d) (e)
32(1)(b) 32(1)(a)(ii) & (iii) 29(1)(c) & 32(1)(d)
Proceeds of resale (f)
Taxes paid in (g) country of origin or export DEDUCTIONS Delivery Costs 3.16 (a) 33(1)(a) 33(1)(f)
Article 146
Articles 163 to 166
EC duties or taxes (b)
Discounts Dividends Marketing
(c) (d) (e)
29(3)(a) 29(1) 29(3)(b) 32(1)(a)(i), 32(4) & 33(1)(e) 29(1) 33(1)(c) 32(5)(a) & 33(1)(d)
Article 144 Annex 23 Note Article 149
Buying Commission (f) Export Quotas Interest Charges Rights of reproduction (g) (h) (i)
Annex 23 Note
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SUBJECT Post-importation work
NOTICE 252 (j)
REGULATION (EEC) REGULATION (EEC) No.2913/92 Article No.2454/93 33(1)(b) 29(1) Annex 23 Note Article 156(a)
Management fees (k) Average additions 3.17 /deductions METHOD 2 Method 2 Identical goods SECTION 4 4.1 4.2
30(2)(a)
Annex 23 Note Article 142
No identical goods 4.3 Customs Value No sales at same level or in same quantity Adjustments Evidence METHOD 3 Method 3 Similar Goods No similar goods Conditions METHOD 4 Method 4 Customs Value No sale at time of 4.4 4.5
30(1) 30(2)(a) 30(2)(a) Annex 23 Note Article 150 Annex 23 Note Article 150 Annex 23 Note Article 150 Article 150(5)
4.6 4.7 SECTION 5 5.1 5.2 5.3 5.4 SECTION 6 6.1 6.2 6.3
30(2)(a)
30(2)(b)
Annex 23 Note Article 151 Article 142
30(1) 30(2)(b) Annex 23 Note Article 151
30(2)(c) 30(2)(c) 30(2)(c) Article 152(1)(a) Annex 23 Note Article 152(1)(b)
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SUBJECT importation
NOTICE 252
No sale in condition 6.4 as imported No sale to unrelated 6.5 customers Sale in greatest 6.6 aggregate quantity Deductions 6.7
30(2)(c) 30(1)
Article 152(2) Annex 23 Note Article 143 Article 152(3) Annex 23 Notes Articles 152(1)(a) & 152(2) Annex 23 Notes Article 152(1)(a)(i) Annex 23 Note Article 142(1)(e) Articles 181 & 181(a)
Profit and general expenses
6.8
Goods of the same 6.10 class and kind Evidence METHOD 5 Method 5 Customs Value Evidence No information METHOD 6 Method 6 Customs Value Evidence FRESH FRUIT AND VEGETABLES SIMPLIFIED PROCEDURE VALUES (SPVs) 6.11 SECTION 7 7.1 7.2 7.3 7.6 SECTION 8 8.1 8.2 8.3 SECTION 9 30 31(1) 31 30(2)(d) 30(2)(d) 30(2)(d) 30(1)
Annex 23 Note Article 153 Annex 23 Note Article 153
Annex 23 Note Annex 23 Note Articles 181 & 181(a) Article 152 Annex 26
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SUBJECT
NOTICE 252
ENTRY PRICE SECTION 10 See paragraph 26.2 SYSTEM and 10.1 STANDARD IMPORT VALUES (SIVs) FROZEN MEATS IN ROUND SETS SECTION 11 11.1 FREE OF SECTION 12 CHARGE GOODS 12.1 12.2 12.4 USED GOODS SECTION 14 14.1 14.2 RENTED OR SECTION 15 LEASED GOODS 15.1 15.2 GOODS LOST OR SECTION 16 STOLEN 16.2 16.3 16.5 DELIVERY COSTS Includible costs Place of introduction SECTION 17 17.2 17.3 32(1)(e) Articles 163 & 165 Article 145 Article 145 Article 145 30 & 31 Article 147(2) 29(1) 30 & 31 Articles 181 & 181(a) Article 147 Article 145
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SUBJECT EC Transport costs Free or provided transport Insurance
NOTICE 252 17.4 17.5 17.6 17.7
REGULATION (EEC) REGULATION (EEC) No.2913/92 Article No.2454/93 Articles 164(a) & 166 32(1)(a) Article 164(b) Article 164(c) 32(1)(e) 33(1)(a) 32(1)(e) & 33(1)(a) 32(1)(e)
Container terminal 17.8 costs Demurrage Surface costs for goods sent by air 17.9 17.10
RATES OF SECTION 18 EXCHANGE CONVERSION OF CURRENCY 18.1 18.2 18.3 18.5 18.6 18.7 18.8 18.9 VALUATION DECLARATIONS AND STATEMENTS SECTION 19 35 35 35 35 Articles 169 & 172 Articles 168 to 172 Article 169 Articles 169 & 170 Article 171 Article 169
19.3 19.4
Articles 178(3) & (5) & 179 Article 178(2)
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SUBJECT
NOTICE 252 19.3 19.4 19.5
REGULATION (EEC) REGULATION (EEC) No.2913/92 Article No.2454/93 Article 178(1) Article 178(3) Article 179(3) Articles 503 to 548 Article 173 Articles 147 and 178 to 181
CUSTOMS WAREHOUSING
SECTION 20 98 to 113 20.2 20.3 20.4 20.5 20.6 112(1) 29, 30 and 31 29(1) 201
Article 178
OUTWARD PROCESSING RELIEF (OPR)
SECTION 21 145 to 153 151(2) 21.1 21.2
748 to 787
Article 178
STANDARD EXCHANGE SYSTEM (SES)
SECTION 22
22.1 22.2 INWARD PROCESSING RELIEF (IPR)
29(1) and 154 to 159
Article 178
SECTION 23 114 to 129
549 to 649
23.1 23.2
29(1), 30 and 31 and 121 Article 178
VALUATION FOR SECTION 24 See paragraph 26.3 VAT
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SUBJECT VALUE FOR TRADE STATISTICS No sale Successive sales Method 1 (constraints) Buyer and seller related
NOTICE 252
SECTION 25 See paragraph 26.4
SECTION 27 30(1) SECTION 28 29(1) SECTION 29 29(1)(a) to (d) SECTION 30 29(1)(d) & 29(2) Article 147 & 178 Annex 23 Notes Article 148 Annex 23 Notes Article 143(1)(h)
Definition same SECTION 31 family Selling Agents Branch Offices SECTION 32 32(1)(a)(i) SECTION 33 30 & 31
Article 147
Buying Commission SECTION 34 32(1)(a)(i), 32 (4) & 33(1)(e) Royalties Export Quotas Interest charges Methods 2 and 3 SECTION 35 32(1)(c) & 32(5) SECTION 36 29(1) & 29(3)(a) SECTION 37 33(1)(c) SECTION 38 30(2)(a) & (b) Annex 23 Notes Articles 150 & 151 Article 152(3) Annex 23 Notes Article 152(1)(a) Article 152(1)(b) Annex 26 Annex 23 Note Articles 157 to 162 Annex 23 Notes
Method 4 SECTION 39 (Greatest aggregate) quantity Sheepmeat Method 4(b) (Account Sales) SPVs SIVs Frozen Meat SECTION 40 30(2)(c) SECTION 41 30(2)(c) SECTION 42 36(2) See paragraph 26.2 SECTION 43 31
Article 145
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SUBJECT Rented or leased goods Transport Costs
NOTICE 252 SECTION 44 SECTION 45
Article 164 Annex 25
Air Transport Costs SECTION 46
27. Examples of situations where there is no sale 27.1 Examples
(a) Free consignments (for example gifts, samples, promotion items). Where transactions do not involve the payment of a price, they cannot be regarded as sales. (b) Goods imported on consignment. Under this trading practice, the goods would be dispatched to you not as a result of a sale, but with the intention that you would sell them for the account of the supplier, at the best price obtainable. At the time of entry to free circulation, no sale would have taken place. (c) Goods imported by intermediaries, who do not purchase the goods and who sell them after entry to free circulation. This covers a whole range of situations encountered in commercial practice, whereby goods are delivered to intermediaries without having been the subject of a sale. (d) Goods imported by branches which are not separate legal entities. There can be no sale, because a sale necessarily involves a transaction between two separate legal entities. (e) Goods imported under a hire or leasing contract. Hire or leasing transactions by their very nature do not constitute sales, even if the contract includes an option to purchase the goods. (f) Goods supplied on loan, which remain the property of the sender. Goods (often machinery) are sometimes loaned by the owner to a customer. These transactions do not involve sales. (g) Goods (waste or scrap) imported for destruction in the EC, with the sender paying you for your services. As costs are incurred in connection with this destruction, the exporter would pay you an amount for your services. As you would not pay for the imported goods but, on the contrary, be paid for accepting and destroying them, no sale would have taken place. Note. See also Section 29 regarding the constraints on the use of Method 1.
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28. Examples of sales for export to EC 28.1

FACTS Company A of London orders 1,000 shirts from Company B of Brussels at a price of 7.20 each, delivered to London. Company B has 8,000 shirts in stock in a warehouse in Taiwan which were originally purchased from a manufacturer there for 4.50 each. Company B arranges for the goods to be shipped from the warehouse to Company A which imports the goods. COMMENTS The sale with price of 4.50 does not satisfy the last sale in a commercial chain test, nor can it be demonstrated that the corresponding sale took place for export to the EC.
Example 1
28.2
FACTS
Example 2
Company A buys hand-carved wooden coffee tables in India and stores them in a Bombay warehouse awaiting orders. After a visit to the UK, Company As sales manager believes that there is a market for these products and ships ten samples of eight types of table on speculation to Tilbury via sea freight. The eight types of table cost Company A on average 2,000 rupees each. While the ship is at sea, Company A sells all eight coffee tables to Company B of London for 6,400, FOB Bombay. Before the goods arrive at Tilbury, they are re-sold by Company B to a customer in Birmingham for 7,200. COMMENTS The declarant cannot use the price of 2,000 rupees per unit, because it is not the last sale in a commercial chain. Also it cannot be shown that the sale in question was for the export of goods to the Community. The sale with the price of 6,400 is also not the last sale in the chain. However, it is possible to demonstrate that the goods while in transit were sold at this price to the Community.
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28.3
FACTS
Example 3a
Company A with a head office in Malta, buys petroleum products from Company B, a company in a third country, and stores them in facilities located in Malta. The goods conform to the standards which apply in the markets of both EC and Malta. After 3 weeks, Company A sells the products in question to Company C a UK company, and consigns the goods from Malta to the UK. COMMENTS The goods are not purchased by Company A in the context of a sale for export to the EC. Although the goods meet the norms which apply in the EC, they cannot be regarded as sold for export to the EC. They are sold by Company B with a destination in Malta. Consequently, the customs value cannot be based on the earlier sale.
28.4
FACTS
Example 3b
Company A, a firm established in a third country, buys in a third country petroleum product which meet the norms of the EC market. These purchases are made subsequent to receipt of specific orders by Company A from a UK firm Company B. Due to limitations in its storage facilities in the UK, Company B requests that Company A holds the goods in its facilities for a 3 week period before shipment to the UK. The goods are subsequently shipped to the UK. COMMENTS The purchase by Company A is not the last sale in a commercial chain. However, the goods (which meet the required EC standards) have been bought in the context of prior arrangements for re-sale and shipment to the EC. The intervention, before shipment by Company A, of a period involving the actual storage in a third country on behalf of Company B does not invalidate the requirements for a sale for export to the Community.
28.5
FACTS
Example 4
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Company A is a US company engaged in the marketing of various types of perfumes, cosmetics, creams, etc, which it sources from various manufacturers throughout the world (Price A). The European operations are directed from Company As head office in Syracuse, New York and consist of rented offices in London, out of which sales persons visit the purchasing offices of EC drug stores, negotiate prices, take orders and send them for processing (shipping products, invoicing and collection of accounts) to Syracuse. Products are sold to EC customers on a delivered, duty paid basis (Price B). Although the sales persons have the authority to negotiate prices and sales contracts they do not have a general authority to contract on behalf of Company A. COMMENTS The declarant cannot use Price A as it does not arise from the last sale in a commercial chain. Price A would be acceptable only where additional elements exist (for example, direct shipment by the producer and the goods bear marks or specifications indicating they are destined for the EC market).
28.6
FACTS
Example 5
The President of Company A of London, during a visit to Thailand, is offered a closeout deal on 10,000 metres of assorted silk fabrics at a job lot price of 20,000 FOB Bangkok. He purchases the whole 10,000 metres and arranges for the fabric to be sent to the UK by ship on 4 April. While attending a convention on 8 April, he meets the President of Company B, a silk blouse manufacturer from Manchester, who agrees to buy the 10,000 metres of silk now en route to the EC for 39,000, delivered to Liverpool. COMMENTS The lower price sale is not the last sale in a commercial chain, but it does arise from a sale for export to the Community.
28.7
FACTS
Example 6
Company A of London enters into an agreement to buy 100 food mixers from Company B, a US entrepreneur at a price of 22.50 each. Company B negotiates with Company C of Detroit to manufacture the food mixers for a price of 20.75 each, Company C being responsible for shipping the goods to Company A in London. COMMENTS
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The lower price sale could not be claimed by the importer. It is not the last sale in a commercial chain. However, it remains to be demonstrated that the sale to which the lower price corresponds was already a sale for export to the EC, taking account of the requirement of direct supply by the manufacturer. This proof is complete if the products when sold by the manufacturer bear specifications or marks showing their destination for the EC market.
28.8
FACTS
Example 7
Company A is a multinational hotel chain with hotels in several countries, including the UK. Each UK hotel is incorporated as a separate limited liability company. At the beginning of every year, each hotel submits purchase orders to the New York head office for its supply needs for the following twelve months. The head office then submits purchase orders to various suppliers in the USA with instructions to send the goods either to each hotel directly or to the New York head office for subsequent shipment to each chain hotel. The suppliers invoice the head office in New York which then bills each hotel in the chain. COMMENTS The same conclusions as for example 6, if the goods are sent to each hotel directly from the supplier. If the goods are sent to the head office before being shipped to the UK, then the sale for export test can be positive only if other elements of proof are demonstrated: the goods correspond to Community specifications or bear marks which indicate their destination for the EC market.
28.9
FACTS
Example 8
Company A produces perfumes, cosmetics etc which it sells to distributors in the EC and the US. In order to maintain differential pricing on the two markets, Company A requires its distributors not to re-sell the goods outside of their respective territories. In a particular case, a UK firm buys products from the US distributor and ships the goods to the Netherlands. COMMENTS The first sale does not satisfy the sale for export to the EC requirement.
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29. Method 1 Conditions for use 29.1 Conditions for using Method 1
Before you can use Method 1 you must be able to satisfy all of the following conditions: (a) There must be no restrictions as to the disposal or use of the goods by you except those which: are imposed or required by law or by the public authorities in the EC limit the geographical area in which the goods may be resold, or do not substantially affect the value of the goods.
Examples of restrictions which can be ignored: an official licence is needed to trade in the imported goods the goods can be sold only in the UK, or the goods cannot be sold before a certain date, for example cars which cannot be sold before the start of a model year.
(b) The sale or price must not be subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued. Examples of conditions or considerations for which a value cannot be arrived at: the seller fixes the price of the imported goods on condition that you buy other goods in specified quantities the price you pay for the imported goods depends upon the price you charge the seller for other goods, or the price you pay for the imported goods depends upon an agreement you make with the seller for example you import semi-finished goods on the understanding that you will send a specified quantity of the finished goods to the seller.
But you can ignore conditions or considerations relating to the production or marketing of the imported goods. For example, the fact that you provide the seller with engineering and plans undertaken in the EC does not prevent you using Method 1.
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Note. Where you can determine the value of a condition or consideration you can use Method 1, however, you must add that value to the price paid or payable as an indirect payment by you to the seller. When completing form C105A (see paragraph 19.1) you must put the amount in box 11(b). (c) where the seller receives (directly or indirectly) part of the proceeds of any subsequent resale, disposal or use of the imported goods, you must be able to make an appropriate addition to take account of this. (paragraph 3.15(f) and 3.17 refer). Where you cannot make an appropriate addition, Method 1 cannot be used, and (d) if you are related to the seller (see paragraph 3.10) you must be able to show that you do not get a reduced price because of this relationship. Section 30 explains how to do this.
30. Method 1 - Buyer and seller related

This Section assumes you are the buyer of the goods.
30.1 General information if you are related to the seller

If you are related to the seller (see paragraph 3.11), the price paid or payable can be accepted under Method 1 as long as you can show that the relationship has not affected the price. One way you can do this is by applying the following tests for comparison purposes. (a) You need to show that the price you paid to the seller is close to one of the following: the transaction value of identical (see paragraph 4.2) or similar (see paragraph 5.2) goods exported to the EC, in sales between buyers and sellers who are unrelated the customs value of identical or similar goods arrived at under Method 4 (see Section 6), or the customs value of identical or similar goods arrived at under Method 5 (see Section 7).
Note. the test values must have been accepted by us at or about the same time as the importation of the goods to be valued. (b) Alternatively you could provide information which demonstrates that either: you and the seller trade with each other as though you are unrelated
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you pay the same price as unrelated buyers in the EC operating at the same commercial level and purchasing similar quantities of the goods, or the price you pay is fully costed (arms length).
We may also decide to examine the circumstances surrounding the sale to determine whether the transaction value is acceptable. In practice we are seeking assurance that you do not receive preferential treatment under the inter-company pricing arrangements because of your relationship with the seller. If, following enquiries, we have grounds to consider that the price is affected by the relationship, we will tell you what these grounds are. If you request, this will be in writing. You will have a reasonable opportunity to respond. If it is finally concluded that the relationship has influenced the price, Method 1 cannot be used. Then you must try Method 2 (see Section 4).
30.2
Transfer pricing
Transfer prices are the prices at which a multi-national enterprise (MNE) transfers physical goods and intangible property or provides services to related (associated or connected) enterprises. Both UK tax law and EC customs law require prices within a MNE to be set, for corporation tax and customs valuation purposes respectively, as if group members are not related. A transfer price may be used as the basis of a Method 1 value only where it fulfils the criteria of Article 29 of the Customs Code (see Section 26 and 30.1) and all relevant costs (see Section 3.15) are included in the dutiable value if paid separately from the transfer price of the imported goods.
30.3 Retrospective price adjustments (related or unrelated buyer & seller)

Situations may arise, whereby, for a variety of reasons, the price that you pay to the seller for the imported goods is revised or re-negotiated after the entry of the goods to free circulation. When this happens you must consider the customs valuation and customs duty implications. Where, at the time of entry, there are contractual arrangements in place between you and the seller indicating the possibility of retrospective price adjustments, the invoice price for the goods concerned would, in effect, be provisional.
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This means that you cannot arrive at a final value for customs duty at the time of entry. Therefore you should make security arrangements (see paragraph 2.5). Alternatively you can ask us to agree to an arrangement whereby you can pay customs duty outright at the time of entry. Such an arrangement would involve you giving an undertaking to notify us of any price adjustments. Then we would both adjust the customs duty payable upwards or downwards as appropriate, according to any agreed price adjustments subsequently notified. Where there has been a retrospective price increase, we will treat this as part of the total payment made by you to the seller for the imported goods. The fact that you agree to pay such a price increase is regarded as confirmation that the contractual arrangements implied or there was an implicit understanding between you and the seller that such an adjustment may occur, when the goods were ordered or purchased. Thus we will issue a demand (form C18) to you for the arrears of customs duty. Where there has been a retrospective price decrease you may submit a claim for a refund of duty. Your claim must be accompanied by appropriate evidence including full details of the contractual arrangements as well as rebates received from and credits notes issued by the seller. The key item of evidence is the contract between you and the seller. We accept that contracts may be verbal as well as written. However, in the case of a verbal contract we would seek alternative evidence, for example, reports of meetings, correspondence, etc between you and the seller. In cases of doubt we may request an affidavit from the parties to the verbal contract. Where we are satisfied that the price decrease stemmed from contractual arrangements in force at the time of entry of the goods concerned to free circulation, an appropriate refund of duty will be made (subject to the normal rules). In particular the refund claim must be lodged with us within three years from the date of each relevant entry.
30.4
Can we help you?
We know from experience that trading arrangements involving related parties are complex. Therefore it is not possible to cover every situation in this Section. If you need further advice from a valuation liaison officer our Helpline will provide you with contact details.
31. Definition of "same family" 31.1 What does members of the same family mean?
By members of the same family we mean: husband and wife
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parent and child brother and sister (whether by whole or half-blood) brothers (whether by whole or half-blood) sisters (whether by whole or half-blood) grandparent and grandchild uncle and nephew uncle and niece aunt and nephew aunt and niece brothers-in-law sisters-in-law brother-in-law and sister-in-law, or parent-in-law and child-in-law.
32. Selling agents 32.1 Goods imported to prior order
If a selling agent takes orders from customers in the EC on behalf of a third country seller and then imports to fulfil those orders, Method 1 can usually be used. The customs value will be based on the selling price (inclusive of that selling agents commission) to the EC customer. This also applies where: the contract provides for a supply of pre-ordered goods to be delivered to the customer at certain intervals to meet production requirements, and the selling agent holds the customers pre-ordered stock for delivery on demand.
Note. Where you can use Method 1 in these circumstances it must be used.
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32.2
Goods imported for sale from stock
Where a selling agent imports goods to sell later from stock held in the UK on behalf of the third country seller, Method 1 cannot usually be used and Methods 2 to 6 (see Sections 4 to 8) must be tried.
33. Branch offices 33.1

(a)
If Method 1 is used
through a branch office which does not have a separate legal status of its own directly by the suppliers own employees, or by a person or firm acting in the suppliers name (for example, under Power of Attorney),
Sales to branches Where goods are imported either:
the transaction cannot be regarded as a sale. The parties are regarded as being part of the same legal entity. A company cannot sell to itself and therefore the prices shown on inter-company transfer or accounting documents cannot be used to establish the customs value under Method 1. It may be possible to use an earlier sale, for example, if the supplier has purchased rather than manufactured the goods to be valued (see paragraph 3.5). (b) Sales to prior order Where the goods are imported to the prior order of EC customers, the value can be established under Method 1 on the basis of the price actually paid or payable by the buyer (the customer in the EC) to the seller.
33.2
Where Method 1 cannot be used
Where Method 1 cannot be used you must try Methods 2 to 6 as explained in Sections 4 to 8. Where you can show that the intra-company invoice value between the head office and its branch or vice-versa represents a fully costed (arms length) price (see Section 30), this would be acceptable under Method 6. It is consistent with the principles and general provisions of the WTO Valuation Agreement.
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34. Buying commission 34.1 Buying commission and customs value
Buying commission is the term used for the fees paid by an importer to his agent for the services in representing him in the purchase of the imported goods. Among the tasks undertaken by a buying agent are the following: to find suppliers tell the seller what you want collect samples inspect the goods buy the goods on your behalf, or arrange insurance, transport, storage and delivery of the goods.
The payment (commission) made to a buying agent can be left out of the customs value so long as the payment is shown separately from the price actually paid or payable for the goods. Remember you must always include buying commission in the value for import VAT (see Section 24.2).
34.2 Do I need evidence of buying commission?

Yes. In order to exclude the payment for buying commission from the customs value, the payment must be shown separately from the price for the goods on the documentation (for example invoice, valuation declaration) accompanying the entry to free circulation. We may ask for further evidence of the contractual and trading arrangements between you and the other parties involved in support of any claim to leave out the amount for buying commission from the customs value. This may include the following: a copy of the contract between you and your buying agent a copy of the original sellers invoice showing the price of the goods or, alternatively if this cannot be produced a copy of the original sellers contract of sale showing the price of the goods, or
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copies of purchase orders, correspondence or other documentation which clearly evidence a bona fide buying agency arrangement.
If no evidence is available or the evidence produced is considered unsatisfactory, Customs may decide that no buying agency arrangement exists and the payments you make to the agent should be included in the customs value. Note: Requests to amend a customs declaration to exclude nondutiable elements (under Article 33 of the Code) after the entry has been accepted and the goods released into free circulation will be considered on a case by case basis.
35. Royalties and licence fees

This Section assumes you are the buyer of the goods.
35.1
What is a royalty or licence fee?
These terms describe payments to a person for use of that persons patent or design rights, processes, trade marks, copyrights or for know how. Traders often have to pay for the right to manufacture, use or sell the licensors goods or for technical knowledge and assistance.
35.2 When do I have to include such payments in the customs value?

Royalty or licence fees payable to the seller are to be included in the customs value as long as they both: (a) (b) relate to the imported goods, and are paid as a condition of the sale.
This rule does not apply where such payments are made for the right to reproduce the imported goods (see paragraph 3.16( i)). In addition a royalty or licence fee for the right to use a trade mark is only to be included in the customs value where: the royalty or licence fee relates to goods which are resold in the same state or which are subject to only minor processing (such as diluting or packing) after importation the goods are marketed under the trade mark, affixed before or after importation, for which the royalty or licence fee is paid, and you are not free to obtain such goods from other suppliers unrelated to the seller.
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35.3 What if they relate partly to the imported goods and partly to other ingredients or component parts added, or services related to the goods after their importation?
You can apportion the royalty payment between dutiable and non-dutiable elements. The basis for the apportionment of the total payment can sometimes be found in the licence agreement or be obtainable from the licensor. Where this is not the case we recommend that you contact Customs (see paragraph 3.17). Where apportionment is not possible because of a lack of relevant information, you cannot use Method 1. You must try Method 2 (see Section 4).
35.4
What if I pay a third party?
The conditions in paragraph 35.2(b) equally apply. Except that payments made to a person who is not related (see paragraph 3.11) to the seller are only to be included in the customs value when the seller requires those payments to be made.
35.5
Can we help you?
We know from experience that trading arrangements involving payment of royalty or licence fees are complex and vary with each royalty or licence agreement. Therefore it is not possible to cover every situation in this Section. For further advice you should contact our Helpline.
36. Export quota and licence payments 36.1 This Section assumes you are the buyer of the goods.
Textile products Where the supplier of the textiles has had to purchase quota for export of the goods and passes that charge on to you, this charge may be left out of the customs value provided that evidence to support this amount as paragraph 36.3 below is obtained.
36.2
Repayment or remission applications
Claims to exclude quota charges will be dealt with under the normal customs duty repayment provisions. You may submit a claim to customs up to three years from the date of entry to free circulation. You must support all claims with the appropriate evidence as detailed below. Further details on repayments & remissions are given in Notice 199.
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36.3
What evidence is needed?
Evidence could include any of the following: a. a copy of the contract of sale with the manufacturer showing the price of the goods b. a copy of the export quota licence transfer document and the document showing the price paid for the quota, or c. a copy of any other commercial documentation confirming the cost of acquiring the quota from a third party.
36.4

Requirement to keep evidence

details of the method used to establish the amount of any deduction claimed copies of supporting documentation including (where relevant) hard copies of website quota values, and copies of the export licences.
You should retain for inspection by customs:
These documents should be cross-referenced to the relevant import entries and be made available to customs on request. In the absence of satisfactory evidence the amount claimed will be rejected and a post-clearance demand issued.
36.5
Meat: Hilton Scheme beef and veal
Under an arrangement between the EC and some exporting countries a quota is allocated for importations of high quality fresh, chilled or frozen beef or veal. This arrangement is known as the Hilton Scheme. The authorities in the exporting countries allocate the quota to slaughterhouses by issuing certificates of authenticity. If you have a certificate you do not have to pay agricultural levy. These certificates relate to a particular shipment. Any charge to you for a certificate must be included in the customs value of the meat.
37. Interest charges 37.1 How interest charges affect the customs value
Charges for interest under a financing arrangement entered into by you for the purchase of imported goods can be left out of the customs value as long as: the charges are shown separately from the price actually paid or payable for the goods
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the financing arrangement has been made in writing, and where required by us, you can demonstrate that: such goods are actually sold at the price declared as the price actually paid or payable (net of the interest charge), and the claimed rate of interest does not exceed the level for such transactions prevailing in the country where, and at the time when, the finance was provided.
These provisions apply to Methods 1 6 (see Sections 3 8).
37.2
What evidence is needed?
The charge for interest must be shown separately from the price for the goods on the documentation (for example, invoice, valuation declaration) accompanying the entry to free circulation. We may call for further evidence in support of any claim to leave out the amount for interest charges from the customs value. Such evidence would include: a copy of the finance agreement, or a copy of the contract of sale of the goods if it contains the financing clause, and information to show that the claimed rate of interest is not excessive.
Note: Requests to amend a customs declaration to exclude nondutiable elements (under Article 33 of the Code) after the entry has been accepted and the goods released into free circulation will be considered on a case by case basis.
38. Methods 2 and 3 Examples of adjustments for level and quantity 38.1 Same commercial level and quantity no adjustment required
FACTS You are a wholesaler who imports 1700 articles for which Method 1 cannot be used. You can produce a customs entry for 1700 articles of identical/similar goods imported by a wholesaler. This entry has been accepted by EC Customs under Method 1. The customs value is 6 units per article CIF. CONCLUSION
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As the quantity and commercial level are the same no adjustment is needed. The value of 6 units per article CIF is acceptable as the customs value under Method 2/3.
38.2 Same commercial level but different quantity no adjustment required

FACTS You are a wholesaler who imports 2000 articles for which Method 1 cannot be used. You can produce a customs entry for 1700 articles of identical/ similar goods imported by a wholesaler. This entry has been accepted by EC Customs under Method 1. The customs value is 6 units per article CIF. It has been established that the supplier of the identical/similar goods sells at 6 units per article CIF to wholesalers regardless of quantity ordered. CONCLUSION As the commercial level is the same and the quantity ordered does not affect the price no adjustment is needed. The value of 6 units per article CIF is acceptable as the customs value under Method 2/3.
38.3 Different commercial level and quantity no adjustment required

FACTS You are a wholesaler who imports 1500 articles for which Method 1 cannot be used. You can produce a customs entry for 1200 articles of identical/ similar goods imported by a retailer. This entry has been accepted by EC Customs under Method 1. The customs value is 6 units per article CIF. It has been established that the supplier of the identical/similar goods sells at 6 units per article CIF regardless of the quantity ordered and the commercial level of the customer. CONCLUSION As the commercial level and the quantity ordered does not affect the price no adjustment is needed. The value of 6 units per article CIF is acceptable as the customs value under Method 2/3.
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38.4 Same commercial level but different quantity adjustment required

FACTS You are a wholesaler who imports 1700 articles for which Method 1 cannot be used. You can produce a customs entry for 2300 articles of identical/ similar goods imported by a wholesaler. This entry has been accepted by EC Customs under Method 1. The customs value is 4.75 units per article CIF. It has been established that the supplier of the identical/similar goods sells at different prices depending on the quantity ordered. The price list shows that for: less than 2000 articles the price is 5 units 2000 articles or more the price is 4.75 units.
CONCLUSION As the commercial level is the same no adjustment is required for level. An adjustment is required for quantity. The price list shows that the price of 1700 articles is 5 units per article. Therefore the value of the identical/similar goods must be increased by 0.25 units per article. The value of 5 units per article CIF is acceptable as the customs value under Method 2/3.
38.5 Different commercial level but the same quantity adjustment required
FACTS You are a wholesaler who imports 2800 articles for which Method 1 cannot be used. You can produce a customs entry for 2800 articles of identical/similar goods imported by a retailer. This entry has been accepted by EC Customs under Method 1. The customs value is 2.5 units per article CIF. It has been established that the supplier of the identical/similar goods sells at different prices depending on the commercial level of the customer. The price list shows that for wholesalers a 20% discount is given. Retailers pay the list price. CONCLUSION As the quantity is the same no adjustment is required for quantity.
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An adjustment is required for commercial level. The price list shows that a wholesaler receives 20% discount. Therefore the value of the identical/similar goods must be decreased by (2.5 x 20% = 0.5) 0.5 units. The value of 2 units per article CIF is acceptable as the customs value under Method 2/3.
38.6 Different commercial level and quantity adjustment required

FACTS You are a wholesaler who imports 2500 articles for which Method l cannot be used. You can produce a customs entry for 1500 articles of identical/ similar goods imported by a retailer. This entry has been accepted by EC Customs under Method 1. The customs value is 2.5 units per article CIF. It has been established that the supplier of the identical /similar goods sells at different prices depending on the quantity ordered. A 20% discount is also given to wholesalers. The price list shows that for: less than 2000 articles the price is 2.5 units 2000 articles or more the price is 2 units.
CONCLUSION An adjustment is required for quantity. The price list shows that the price of 2500 articles is 2 units per article therefore the value of the identical/similar goods must be decreased by 0.5 units per article. Also an adjustment is required for commercial level. The wholesaler receives a 20% discount therefore the value of the identical/similar goods which has already been adjusted for quantity (2 units per article) must be decreased by (2.5 x 20% = 0.4) 0.4 units. The value of 1.6 units per article CIF is acceptable as the customs value under Method 2/3.
39. Method 4 Examples of arriving at the unit price in the greatest aggregate quantity 39.1
Quantity 110 units
Example 1
Unit price 100
The price list shows that different prices are charged for different quantities ordered:
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1125 units over 25 units
95 90
Sales are made as follows: No. of sales 10 sales of 5 units 5 sales of 11 units 2 sales of 40 units Total quantity sold 50 55 80 Unit price (from price list) 100 95 90
Greatest number of units sold at one price is 80. The unit price of these is 90. Therefore the unit price in the greatest aggregate quantity is 90. You import 2000 units. The value of the consignment is therefore 2000 x 90 or 180,000. From this value the allowable deductions as indicated in paragraph 6.7 are to be made. 900 units are imported. 500 units are sold at 95 each. 400 units are sold at 90 each. The greatest number of units sold at one price is 500 units. The unit price is 95 each. Therefore the unit price in the greatest aggregate quantity is 95. The value of the 900 units is therefore 900 x 95 = 85,500. From this value the allowable deductions as indicated in paragraph 6.7 are to be made.
39.2
Example 2
200 units are imported. They are sold in small lots as follows: Quantity 40 units 30 units 15 units 50 units 25 units Unit price 100 90 100 95 105
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35 units 5 units
90 100
The quantity sold at each unit price is as follows: Total quantity sold 65 50 60 25 Unit Price 90 95 100 105
The greatest number of units sold at one price is 65. The unit price is 90. Therefore the unit price in the greatest aggregate quantity is 90. The value of the 200 units is therefore 200 x 90 = 18,000. From this value the allowable deductions as indicated in paragraph 6.7 are to be made.
40. Method 4(a) Sheepmeat carcases arrangement with the International Meat Trade Association Inc (IMTA) 40.1
If you: import first quality sheepmeat carcases on consignment from Australia or New Zealand, and use Method 4(a),
General information
you can, if you wish, produce the IMTA price list as evidence of the unit price in the greatest aggregate quantity. You must make a deduction of 10% from the IMTA price for profit and general expenses or commission, and transport costs within the EC. You also need to deduct any included duty or levy. If you use this arrangement you must quote the reference MOV 595/661/001 on the valuation declaration (see paragraph 19.1) or statement (see paragraph 19.6).
40.2
IMTA price list
The IMTA Price Committee normally issues the price list every Tuesday. The prices are to be used for customs entries accepted after midnight on the following Sunday/Monday. If a list is not issued (perhaps because of a Public Holiday) the prices on the list issued the week before are to be used.
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40.3
New season sheepmeat carcases
When new season sheepmeat carcases are being imported the IMTA price list shows separate prices for new season and old season sheepmeat carcases. If you import new season sheepmeat carcases before a price is quoted on the price list, you cannot use the IMTA arrangement. You must use Method 4(b) (see paragraphs 6.3 and 6.11) for the first importation.
40.4 Sheepmeat carcases removed after sale from Customs warehouse

The IMTA arrangement cannot be used. The customs value can normally be arrived at under Method 1 (see Section 3).
41. Method 4(b) - Fresh fruit, vegetables and cut flowers - account sales procedure 41.1 General
If you import fresh fruit, vegetables or cut flowers on consignment you can use the account sales procedure to arrive at the customs value under Method 4(b) (see paragraphs 6.3 and 6.11). A valuation declaration (see paragraph 19.1) is not required.
41.2
Calculation of deposits at importation
As the goods have not been sold at the time of importation, the amount of duty you must pay cannot be established. Therefore you will need to request release of the goods against a deposit (see paragraph 2.5). To calculate the deposit you must declare on the import entry either: (a) the price you expect to get for the goods (b) the current market value (CMV) published by the trade associations, or (c) the simplified procedure value (SPV) Customs publish (see Section 9 for more details). If you use either (a) or (b) you can deduct before calculating the deposit: for profit and general expenses or commission, and transport costs within the EC, and the included duty.
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41.3
Arriving at the duty payable
Within 90 days of the importation, you must produce to NIDAC evidence of the sale of the goods. No other values, such as SPVs or values used to calculate the deposit may be used. If any goods are not sold in the same state as imported or are unsold, the unit price established for identical or similar produce in the same consignment, which has been sold in the condition in which it was imported, must be used. The amount of duty you must pay will then be calculated. If the deposit you paid was too high you will receive a refund: if it was too low we will ask you to pay more.
41.4
Evidence of sale
Copy invoices. You must produce copy invoices issued to wholesalers or supermarkets. These invoices must show the prices paid by these customers. Statement of sales. If you find it difficult to produce copy invoices (perhaps because you sell to many customers) you can produce a statement showing the following details: names and addresses of the wholesalers or supermarkets quantity sold to each wholesaler or supermarket prices paid by each wholesaler or supermarket, and details of items repacked, destroyed or lost and so on.
Remember you must have the copy invoices available to produce on request.
41.5

Certification of evidence of sale

all the goods on the import entry are accounted for, and the prices shown are those paid by the wholesaler or supermarket.
You must certify on the invoices or statement that:
41.6
Deductions
You may deduct the following from the amount paid to the importer by the wholesaler (net of wholesalers commission and handling expenses) or the price paid by the supermarket:
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10% to cover your commission and general expenses (the percentage has been agreed with the trade associations) the usual costs of transport, insurance and associated costs incurred within the EC, and EC Customs duties.
41.7

Evidence of deductions
a copy of the freight account, which can be split by the distance inside and outside the EC, or a statement of the cost of transporting the goods from the person supplying the freight.
You need only produce:
NOTE: Only importers who provide their own transport can make a simple statement of the cost of EC freight.
41.8
Losses in repacking
The number of items (such as cartons or boxes) lost in repacking must be shown on the duty reconciliation statement. Minor losses of this nature may be disregarded but where the losses are substantial the procedure set out in Section 16 is to be followed.
41.9

Arriving at the customs value

price paid by the wholesaler or supermarket less 10% less transport costs etc within the EC, and less included duty.
You need to use the following formula:
41.10 value
Example of calculating the customs
The goods are sold for 10,000. The transport costs within the EC are 200. The duty rate is l0%. The deposit was 900. Using the formula:
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The duty due is therefore 800. You will get a refund of 100 (900 - 800). The document used for this calculation is called the duty reconciliation statement. You are to provide such a statement so that the duty due can be calculated.
41.11
Guaranteed advances
You may agree to make a payment to the supplier on condition that if the net proceeds from the sale of the goods are: (a) and (b) more than the agreed payment, you will also send your supplier the balance, less than the agreed payment, you will stand the loss.
This agreement is called a guaranteed advance. If (a) applies, Method 4(b) can be used. If (b) applies, the guaranteed advance is to be used as the basis to arrive at the customs value under Method 1.
41.12 Example where guaranteed advances are involved

The goods are sold for 5,000. Your commission and expenses are 600. The duty rate is 10%. You agree to pay the supplier: (1) (2) 3,000 5,000
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The customs value under Method 1 is to be based on the guaranteed advance of 5,000.
42. SPVs - List of products covered

SPV Code 1.10 1.30 1.40 1.170 1.200.1 Description New potatoes Onions Garlic Beans Asparagus: green Commodity Code 0701 90 50 0703 10 19 0703 20 00 0708 20 00 0709 20 00 10
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1.200.2 1.240 1.270 2.30 2.40 2.60 2.70.1 2.70.2 2.70.3 2.70.4
Asparagus: other Sweet peppers Sweet potatoes, fresh 0r chilled, whole Pineapples Avocados Sweet oranges Clementines Monreales and Satsumas Mandarins and Wilkings Tangerines and others
0709 20 00 90 0709 60 10 Ex 0714 20 0804 30 00 09 0804 40 00 10 0805 10 20 0805 20 10 05 0805 20 30 05 0805 20 50 07 0805 20 50 37 0805 20 70 05 0805 20 90 05 0805 20 90 09 0805 50 90 11 0805 50 90 19 0805 40 00 11 0805 40 00 19 0806 10 10 0807 11 00 0807 19 00 10 0807 19 00 30
2.85 2.90.1 2.90.2 2.100 2.110 2.1.20.1
Limes (citrus aurantifolia, Citrus latifolia) Grapefruit white Grapefruit pink Table grapes Water melons Melons Amarillo, Cuper, Honey Dew (including Cantalene), Onteniente, Piel de Sapo (including Verde Liso), Rochet, Tendral, Futuro Other melons Pears Nashi (Pyrus pyrifolia) Ya (Pyrus bretscheideri) Pears other Apricots
2.120.2 2.140.1
0807 19 00 91 0807 19 00 99 0808 20 50 10
2.140.2 2.150
0808 20 50 90 0809 10 00
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2.170 2.180 2.190 2.200 2.205 2.220
Peaches Nectarines Plums Strawberries Raspberries Kiwi fruit
0809 30 90 0809 30 10 0809 40 05 0810 10 00 0810 20 10 0810 50 00
43. Frozen meat in round sets alternatives to the use of Method 1 43.1
Where (a) the invoice from the foreign supplier clearly includes a breakdown of unit prices for each of the cuts (b) the whole consignment is entered directly to free circulation or removed from Customs warehouse at the same time (c) Part of the consignment is being entered but it contains a natural balance (a set) of cuts and the invoice price accompanying the goods reflects the price of the set (d) particular cuts are entered to free circulation piecemeal and the invoice from the foreign supplier does not provide an acceptable breakdown of unit prices for each of the cuts
Alternatives to the use of Method 1

the customs value may be based on see unit prices but only if they are not average prices. the invoice price for the whole consignment. In this case you do not need to obtain a breakdown of unit prices from the foreign supplier. customs value may be based on the invoice price as in (b) above.
worksheet Method. This involves an apportionment of the price paid or payable to the foreign supplier, taking into account the weights of the various cuts in the consignment and the current market value (CMV) for the individual cuts applicable on the date of the purchase contract for the whole consignment. The current market value can be established from the weekly list of prices issued to the trade by lMTA. An illustration of how the price actually paid for the consignment can be apportioned on the basis of market prices is given at
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paragraph 43.2 below. The customs value must not be established by reference to average prices. (e) a sale of particular cuts has been made to a third party or agreed with a third party (there is a verbal or written contract of sale) before removal of the cuts from Customs warehouse into free circulation the price paid or payable by the third party. In such a sale, the following items may be excluded from the customs value provided that they are separately distinguished from the price paid or payable for the goods: the cost of warehousing and/or preserving the goods whilst in warehouse the cost of acquiring a GATT import licence for the goods through a necessary purchase from a third party (charges included in the price to compensate the seller for the notional value of an allocated GATT import licence are includible in the customs value), and included EC duties or levies, see paragraph 3.16(b).
43.2 Example of apportioning the price paid using market values

Consignment quantity = 1000 pounds. Invoice Price = 1000. Average unit price = 1 per pound. A Cuts = 200 pounds CMV = 2.00 per pound = 400 B Cuts = 500 pounds CMV = 1.50 per pound = 750 C Cuts = 300 pounds CMV = 1.00 per pound = 300. The ratio is thus 28:52:20. Apportioning the invoice price of 1000 produces the following: A Cuts = 280 = 1.40 per pound B Cuts = 520 = 1.04 per pound C Cuts = 200 = 0.66 per pound. These unit prices would then be used to establish the customs value of those cuts removed to free circulation instead of the average unit price.
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44. Rented or leased goods - case studies 44.1 Case study one yearly hire charge (not including maintenance)
Facts An electronic sorting machine is imported by a user under a hire contract, the main terms of which are: (a) the importer is to pay the supplier a yearly hire charge of 1,000 in advance
(b) the machine is to be erected and maintained by the supplier at the expense of the importer (c) (d) import duties and taxes are borne by the importer, and post importation transport costs are borne by the importer.
The machine is invoiced pro forma at an amount corresponding to 2 years of rental. No payment is made in respect of this invoice. It has been established that these machines are never sold and are available only to users who are prepared to subscribe to the above contract for 5 years. The importer and supplier are not related. The estimated life of the machine is 5 years. The interest rate is 15% per annum. Therefore Q = 1000, R = 15%, N = 5 Calculation
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3,855 rounded down in the importers favour. As this represents a value at the EC border, no further adjustments are required.
44.2 Case study two yearly hire charge (including maintenance and other expenses)
Facts A machine which produces artificial hair is imported by a doll manufacturer under a hire contract, the main terms of which are: (a) (b) (c) (d) (e) the importer is to pay the supplier a hire charge of 1,000 per annum the hire charge is to be paid annually in arrears the supplier will maintain the machine free of charge import duties and taxes will be paid by the importer, and the costs of delivery to the importers premises will be paid by the supplier.
The machine is invoiced at a nominal price in respect of which no payment is made. The importer and supplier are not related. The estimated life of the machine is 13 years. The interest rate is 15% pa. The average maintenance cost will be 140 pa. Therefore Q = (1000 - 140) = 860, R = 15%, N = 13
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Calculation
4,801 rounded down in the importers favour. A deduction for the extra cost of delivering the goods beyond the place of introduction into the EC may be appropriate, subject to the normal rules.
45. Examples of apportionment of transport costs and insurance charges 45.1 Goods invoiced on pre-CIF EC border terms
(a) FACTS Goods purchased on FOB terms. Freight from Japan to Tilbury separately charged 1,000. Goods imported at Tilbury. Place of introduction Tilbury. CONCLUSION The charge for transport is to the place of introduction. No deduction for transport within the EC is needed. Therefore the amount to be included in the customs value for transport costs is 1,000. (b) FACTS
Goods purchased on FOB terms. Freight from Norway to buyers warehouse in Glasgow separately charged 200.
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Goods imported at Leith. Place of introduction Leith. CONCLUSION The place of introduction is Leith BUT the charge for freight is to the buyers warehouse in Glasgow. The journey from Leith to Glasgow is within the EC. The cost of the journey from Norway to Leith is shown in the shipping lines rate book as 180. Therefore only 180 is to be included in the customs value. (c) FACTS
Goods purchased on ex-works terms. Freight from sellers factory to New York is separately charged 50. Freight from New York to Felixstowe is separately charged 600. Goods imported at Felixstowe. Place of introduction Rotterdam where the goods were transhipped. CONCLUSION The place of introduction is Rotterdam. BUT the charge for freight is to Felixstowe. The journey from Rotterdam to Felixstowe is within the EC. The cost of the journey from New York to Rotterdam is shown in the shipping lines rate book as 550. The whole of the freight charge from the sellers factory to New York is to be included in the customs value. Total freight addition = 550 + 50 = 600. (d) FACTS
Goods purchased on delivered airport of departure terms. Air transport costs from New York to Heathrow Airport separately itemised 300. Total air waybill charges (inclusive of charges for loading and handling at airport of departure) 350.
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Goods imported at Heathrow Airport. Place of introduction is the notional point where the aircraft crosses the EC border. CONCLUSION The place of introduction is the EC border BUT the charge for freight is to Heathrow Airport. The journey from the EC border to Heathrow Airport is within the EC. Therefore the cost of that part of the journey is to be deducted from the total charge for the air transport costs. Total air transport costs 300 Percentage of journey outside EC 70% (see Section 46). Therefore 70% of the air transport costs are to be included in the customs value: 70% x 300 = 210 PLUS The difference between the air waybill charges and the air transport costs. These are made up of costs incurred in the country of export, such as loading, handling and clearing charges. The total cost must be included in the customs value. 350 - 300 = 50 Total charge to be included in the customs value = 210 + 50 = 260 (e) FACTS
Goods purchased on FOB aircraft terms. Air transport costs from New York to Frankfurt Airport separately charged 400. Air transport costs from Frankfurt Airport to Heathrow Airport separately charged 100. Goods imported at Heathrow Airport. Place of introduction is the notional point where the aircraft from New York to Frankfurt crosses the EC border. CONCLUSION The place of introduction is the EC border. The air transport costs from Frankfurt Airport to Heathrow Airport are not to be included in the customs value because that journey is within the EC. Also the journey from the EC border to Frankfurt Airport is within the EC. Therefore the cost of that part of the journey is to be deducted from the total charge for the air transport costs (from the 400).
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Total air transport costs from New York to Frankfurt 400 Percentage of journey outside the EC 70% (Section 46 gives details of the percentage of the air transport costs to the EU which must be included in the customs value. Therefore 70% of the air transport costs from New York to Frankfurt are to be included in the customs value: 70% x 400 = 280. (f) FACTS
Goods purchased on FOB Hong Kong terms. Goods shipped by sea to Singapore and then by air to Heathrow Airport. The charge for sea freight from Hong Kong to Singapore is 550. The charge for air freight from Singapore to Heathrow Airport is 1000. Goods imported at Heathrow Airport. Place of introduction is the notional point where the aircraft crosses the EC border. CONCLUSION The sea journey is outside the EC. Thus the sea freight charge of 500 is includible in the customs value. The journey from the EC border to Heathrow Airport is within the EC. Therefore the cost of that part of the journey is to be deducted from the total charge for air freight. Total air freight charge 1000 Percentage of journey outside EC 70% (see Section 46. Malaysia all airports to London). Therefore 70% of the air freight is to be included in the customs value: 70% x 1000 = 700. Total charge to be included in the customs value = 500 + 700 = 1200 (g) FACTS
Goods purchased on FOB Tokyo terms. Goods shipped by sea from Tokyo to Seattle and then by air from Seattle to Heathrow Airport.
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The total freight charge from Tokyo to Heathrow Airport is 2000. No breakdown of the charges for the sea and air journeys is available. Goods imported at Heathrow Airport. Place of importation is the notional point where the aircraft crosses the EC border. CONCLUSION The place of introduction is the EC border but the charge for freight is to Heathrow Airport. The journey from the EC border to Heathrow Airport is within the EC. Therefore the cost of that part of the journey is to be deducted from the total freight charge. As no breakdown of this charge is available, for practical convenience the air transport cost apportionment may be used. Percentage of journey outside EC 83% (Section 46 ). Therefore 83% of the total freight charge is to be included in the customs value. 83% x 2000 = 1660.
45.2 Goods Invoiced on post-CIF EC border terms

(a) FACTS Goods purchased on CIF Birmingham terms. Goods imported at Avonmouth. Place of introduction Avonmouth. CONCLUSION The invoiced amount includes transport to Birmingham, which is beyond the place of introduction but is not separately charged. The seller states that the amount included in the invoice price for the transport from Avonmouth to Birmingham is 50. Therefore the amount to be deducted from the invoice price for post-introduction transport cost is 50. (b) FACTS
Goods purchased on uniform free delivered domicile terms. Goods imported at Dover.
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Place of introduction Dover. Evidence is provided to show that the free - frontier price would be lower than the uniform free domicile price. CONCLUSION The invoiced amount includes transport to the buyers premises in Manchester, Glasgow and Middlesbrough. The seller states that the average amount included in the invoice price for transport within the EC to the buyers premises is 9 per metric tonne. Therefore the amount to be deducted from the invoice price for post-introduction transport costs is 9 per metric tonne. (c) FACTS
Goods purchased on delivered Brighton terms. Goods imported at Newhaven. Place of introduction Marseille (that is, the EC border). CONCLUSION The invoiced amount includes transport to Brighton which is beyond the place of introduction but is not separately charged. There is no statement from the seller of the amount included in the invoice price of the transport from Marseille to Brighton. BUT there is a statement from the haulier of the price charged for the transport to the seller. This evidence can be accepted without confirmation from the seller that this charge has been costed into the price to the buyer. (d) FACTS
Goods purchased on CIF Heathrow Airport terms. Goods imported at Heathrow. Place of introduction is the notional point where the aircraft crosses the EC border. CONCLUSION The invoiced amount includes air transport costs to Heathrow, which is beyond the place of introduction but is not separately charged. There is no statement from the seller of the amount included in the invoice price for the air transport costs to Heathrow.
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A copy of the air waybill is produced as evidence of the amount charged for the air transport. This evidence will be accepted by us providing it can be confirmed that the charge shown on the air waybill is the amount costed into the CIF price by the seller of the goods. The percentages shown in Section 46 can then be applied in the normal way. Where no confirmation can be obtained from the seller, no deduction can be allowed and the air transport percentages do not apply.
45.3 costs
Example of apportionment of insurance
Annual set premium 350.00 Total value of imports in the previous 12 months 1,750.000.00 The premium can be expressed as a percentage of the total value of imports.
This percentage can be used to calculate the insurance costs for individual imports made during the following 12 months. Where the total value of imports includes, for example, insured or non-insured goods or both dutiable and non-dutiable imports, the percentage can be adjusted if the relevant information is available.
46. Air transport costs - percentage to be included in the customs value 46.1 General
The percentages of air transport costs to be included in the customs value are shown in Annex 25 to Regulation (EEC) No. 2454/93 as amended by Commission Regulation (EC) No. 881/2003. The percentages came into effect on 1 May 2004 and apply to all airports of arrival in United Kingdom. Only the air transport costs are to be apportioned not the air waybill or other ancillary charges. Explanatory Note
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Column 1 Third countries (that is, those outside the EC), listed by continents and zones. The percentages are valid for all airports in a given country unless specific airports of departure are indicated. Column 2 The percentages which represent the part of the air transport costs from a given third country to the EC to be included in the customs value. Unlisted airports (a) When goods are shipped from countries or from airports not included in the following table, other than the airports referred to in (b) below, use percentage for the listed airport nearest to that of departure. (b) As regards the French overseas departments of Guadeloupe, Guyana, Martinique and Reunion, of which territories the airports are not included in the table, the following rules shall apply: for goods shipped direct to those departments from third countries, the whole of the air transport cost is to be included in the customs value for goods shipped to the European part of the Community from third countries and transhipped or unloaded in one of those departments, only the air transport costs which would have been incurred for carrying the goods only as far as the place the place of transhipment or unloading are to be included in the customs value for goods shipped to those departments from third countries and transhipped or unloaded in an airport in the European part of the Community, the air transport costs to be included in the customs value are those which result from the application of the percentages given in the following table to the costs which would have been incurred for carrying the goods from the airport of departure to the airport of transhipment or unloading. the transhipment or unloading shall be certified by an appropriate endorsement by the customs authorities on the air waybill or other air transport document, with the official stamp of the office concerned; failing this certification the provisions of the last subparagraph of Article 163 (6) of Regulation (EEC) 2454/93 shall apply. 2 Percentages of the air transport costs to be included in the customs value for zone of arrival EC
1 Zone (country) of departure (third country)
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America Zone A Canada: Gander, Halifax, Moncton, Montreal, Ottawa, Quebec, Toronto, (other airports see zone B) Greenland United States of America: Akron, Albany, Atlanta, Baltimore, Boston, Buffalo, Charleston, Chicago, Cincinnati, Columbus, Detroit, Indianapolis, Jacksonville, Kansas City, Lexington, Louisville, Memphis, Milwaukee, Minneapolis, Nashville, New Orleans, New York, Philadelphia, Pittsburgh, St Louis, Washington DC (other airports see zones B and C) Zone B Canada: Edmonton, Vancouver, Winnipeg (other airports see zone A) United States of America: Albuquerque, Austin, Billings, Dallas, Denver, Houston, Las Vegas, Los Angeles, Miami, Oklahoma, Phoenix, Portland, Puerto Rico, Salt Lake City, San Francisco, Seattle (other airports see zones A and C) Central America (all countries) South America (all countries) Zone C United States of America: Anchorage, Fairbanks, Honolulu, Juneau (other airports see zones A and B) Africa 89 78 70
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Zone D Algeria, Egypt, Libya, Morocco, Tunisia Zone E Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Djibouti, Ethiopia, Gambia, Ghana, Guinea, GuineaBissau, Ivory Cost, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Sudan, Togo Zone F Burundi, Democratic Republic of Congo, Equatorial Guinea, Gabon, Kenya, Rwanda, So Tom and Principe, Seychelles, Somalia, St. Helena, Tanzania, Uganda Zone G Angola, Botswana, Comoros, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Republic of South Africa, Swaziland, Zambia, Zimbabwe Asia Zone H Armenia, Azerbaijan, Georgia, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Syria Zone I Bahrain, Muscat and Oman, Qatar, Saudi Arabia, United Arab Emirates, Yemen (Arab Republic) Zone J Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan. Zone K Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Russia: Novosibirsk, Omsk, Perm, Sverdlovsk,
33
50
61
74
27
43
46
57
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(other airports see zones L, M, and O) Zone L Brunei, China, Indonesia, Kampuchea, Laos, Macao, Malaysia, Maldives, Mongolia, Myanmar, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam Russia Irkutsk, Kirensk, Krasnoyarsk, (other airports see zones K, M and O) Zone M Japan, Korea (North), Korea (South), Russia: Khabarovsk, Vladivostok (other airports see zones K, L and O) Australia and Oceania Zone N Australia and Oceania Europe Zone O Iceland, Russia: Gorky, Kuibishev, Moscow, Orel, Rostov, Volgograd, Voronej (other airports see zones K, L and M), Ukraine Zone P Albania, Belarus, Bosnia-Herzegovina, Faroe Islands, Former Yugoslav Republic of Macedonia, Moldova, Montenegro, Norway, Serbia, Turkey Zone Q Croatia, Switzerland 5 15 30 79 83 70
47. Glossary of terms

NOTE: Delivery terms, as defined by the International Chamber of Commerce, are available in the current publication of Incoterms.
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Account sales: A term used when goods imported on consignment are valued for customs purposes by reference to the price they achieve when sold in the Community. Account sales commonly apply to importations of perishable goods. Ad valorem duty: Duty expressed as a percentage based on the customs value of the goods, for example, 10% ad valorem means that the duty payable is 10% of the customs value of the goods. Commission: Commission is a payment made to an intermediary who acts on behalf of either the seller of the goods (selling commission) or the buyer of the goods (buying commission). Customs warehouse: A place approved by Customs and Excise for the storage of goods without payment of import duty. Import VAT is also suspended during storage of warehoused goods (see Notice 232 Customs Warehousing). Declarant: A person who signs the valuation declaration or statement. Also a person who completes and signs a SAD. EC (European Community): Austria, Belgium, Bulgaria, Cyprus*, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, the Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK. The Isle of Man, Channel Islands and Turkey are not members but the customs rules of the EC generally apply. *The European Commission has advised that the application of the Community Customs Code and 6th VAT Directive shall be suspended in the Turkish Republic of Northern Cyprus in which the Government of the Republic of Cyprus does not exercise effective control. Goods from those areas will continue from 1 May 2004 to be treated as non-EC imports. EC Commission: The EC equivalent of our civil service. EEC: Now referred to as EC (see above). FIO (Free in and out): The freight rate covers the sea freight only. The costs of loading and discharging the cargo are not included. Free circulation: Imported goods are in free circulation when: all the import procedures are completed; and all import duties have been paid.
GATT: General Agreement on Tariffs and Trade. GVS (General Valuation Statement): A form used as a season ticket in place of individual valuation declarations.
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Importer: The person declared as such in Box 8 of the SAD (import declaration). The importer can be any person having ownership of or a beneficial interest in the goods between the time of their importation and when they are delivered out of charge. Invoice: The document against which the buyer pays the seller for the goods. IPR: Inward Processing Relief. Member States: Countries which belong to the EC (see list under EC). NIDAC: National Import Duty Adjustment Centre NDRC: National Duty Repayment Centre OJEC: Official Journal of the European Communities. OPR: Outward Processing Relief. On consignment: Goods imported for post importation sale in the EC where the value of the sale is not known at the time of importation. SAD (Single administrative document): The EC form used to declare imported goods to Customs. Full details of the form and its completion are given in the Tariff, Volume 3. SES: Standard Exchange System. SIVs (Standard Import values): SIVs are a special system for valuing certain fresh fruit and vegetables at certain times of the year, when the entry price system is in force. SIVs do not operate concurrently with SPVs. SPVs (Simplified procedure values): SPVs are a special system for valuing certain fresh fruit and vegetables. TURN (Traders unique reference number): Used to identify an importer numerically. It is normally based on the traders VAT registration number, with a three digit extension. Tariff: HM Revenue & Customs Tariff and Overseas Trade Classification. Third Country: Any country which is not a member of the EC. WCO: World Customs Organisation. WTO: World Trade Organisation.
Do you have any comments or suggestions?

We would be pleased to receive any comments or suggestions you may have about this notice. Please write to:
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HM Revenue & Customs Customs & International 10SE Alexander House 21 Victoria Avenue Southend-on-Sea SS99 1AA Please note this address is not for general enquiries. For your general enquiries please phone the Helpline on 0845 010 9000.
If you have a complaint

For further information about our complaints procedures go to www.hmrc.gov.uk and under quick links select Complaints.
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Valuation of Imported Goods For Customs Purposes, VAT and Trade Statistics

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Valuation of Imported Goods For Customs Purposes, VAT and Trade Statistics

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Notice 252 Valuation of imported goods for customs purposes, VAT and trade statistics June 2009

Further help and advice

Other notices on this or related subjects

1. Introduction 1.1 What this notice is about

1.2 Who should read this notice?

1.3 Why do I need a value for customs duty?

1.4 What law covers customs valuation?

1.5 What is import VAT?

1.6 What are trade statistics?

2.2 How do I arrive at the value for customs duty?

2.4 How long must I keep customs records?

2.5 What if I cannot arrive at the value for customs duty?

2.6 What do I do if I disagree with a Customs decision?

3. Method 1 3.1 What is Method 1?

3.2 What is meant by transaction value?

3.3 What if there is no sale?

3.4 How do I arrive at the customs value?

3.6 What other information and documentary evidence is required?

3.7 What evidence of the price paid or payable must I produce?

3.8 What if Customs has doubts about the transaction value?

3.9 What if the sale is subject to any restrictions?

3.10 What if I am related to the seller of the goods?

What does related to the seller mean?

Persons (natural or legal) are related if:

3.13 Does it matter whether I pay the seller direct?

Does it matter whether I pay in cash?

No. You can also pay by letters of credit or negotiable instrument.

3.15 What items must I add to the price paid or payable?

the cost of packing whether for labour or materials.

4. Method 2 4.1 What is Method 2?

4.2 What is meant by identical goods?

4.3 What if there are no identical goods?

4.4 How do I arrive at the customs value?

4.7 What evidence must I produce?

5. Method 3 5.1 What is Method 3?

5.2 What is meant by similar goods?

5.3 What if there are no similar goods?

5.4 What are the conditions for using Method 3?

6. Method 4 6.1 What is Method 4?

6.2 How do I arrive at the customs value?

6.3 What if there is no sale at or about the time of importation?

6.5 What if there are no sales to unrelated persons in the EC?

6.6 How do I arrive at the sale in the greatest aggregate quantity?

6.7 What deductions must I make from the unit price?

6.8 Can I deduct my actual profit and general expenses?

6.9 What if Customs challenge the deduction I have made?

6.10 What is meant by goods of the same class or kind?

What evidence must I produce?

7. Method 5 7.1 What is Method 5?

7.2 How do I arrive at the customs value?

7.3 What evidence must I produce?

7.4 What other evidence is required?

7.6 What if I cannot get this information?

7.7 Can I get help to work out this Method?

8. Method 6 8.1 What is Method 6?

8.2 How do I arrive at the customs value?

8.3 What evidence must I produce?

9. Simplified Procedure Values (SPVs) 9.1 What are SPVs?

9.2 What fruit and vegetables does the scheme cover?

9.3 When can I use SPVs?

9.5 How often do the SPVs change?

9.6 How can I find out the current SPVs?