UK Customs Valuation: how to meet the evidence requirements

Customs Valuation Evidence required to be kept on file for record keeping by HMRC has been clarified. This update of the UK post-Brexit Customs Code covers the type of evidence required to support the determination as well as the use of a method of valuation to ensure compliance.

Why is this important?

Customs Valuation evidence required by HMRC is important to demonstrate that you meet your obligations during a Customs audit. For further information about Valuation, read our Quick Guide to Customs Valuation.

Customs Valuation Evidence Required by HMRC

Valuation Method 1

The following type of evidence must be provided to support the transaction value:

•  A copy of the seller’s invoice or other document against which paymentwill be made.
•  Evidence to support any included, excluded or adjusted amounts provided for by virtue of Regulations 111 to 118, of The Customs (Import Duty)(EU Exit) Regulations 2018. This may include evidence of contracts between buyer and seller detailing the conditions of sale and evidence of the payments made or to be made under those conditions.

Valuation Method 2

The following type of evidence must be provided to support a Method 2 valuation:

• A copy of, or the necessary data to enable HMRC to trace, an import entry (with supporting documents) for identical goods which a Method 1 transaction value has been accepted by HMRC. This transaction value must relate to goods conforming to the conditions provided by virtue of Regulations 120 and 122 of the Customs (Import Duty)(EU Exit) Regulations 2018

Valuation Method 3

The following type of evidence must be provided to support a Method 3 valuation:

• A copy of, or the necessary data to enable HMRC to trace, an import entry (with supporting documents) for similar goods for which a Method 1 transaction value has been accepted by HMRC. This transaction value must relate to goods conforming to the conditions provided by virtue of Regulations 121 and 122 of the Customs (Import Duty)(EU Exit) Regulations 2018

Valuation Method 4

At the time of importation if there is no transaction value or previous method that can be used, a reasonable estimate for deposit purposes of the final sales value should be provided. This estimate should be supported by a pro-forma invoice, statement of value, or other evidence which equally evidences the final sales value.

Once a sufficient quantity of the relevant goods have been sold to allow the unit price to be calculated, copies of the sales invoices and a copy of the calculations must be sent to the National Import Duty Adjustment Centre (NIDAC). Details of the actual deductions claimed must be supplied.

Together with the import entry, one of the following forms of evidence must be provided. The form of evidence must be that which evidences the unit price in the greatest aggregate quantity:

• A sales invoice
• A price list current at the time of importation. Unless an overall percentage deduction has been agreed with HMRC, details of the actual deductions claimed must be provided.

  

Valuation Method 4 – Fruit and Vegetables

Alternatively, the Simplified Procedure Value (SPV) scheme can be used for whole fruit and vegetable produce, of a single kind, imported on a consignment basis. SPV cannot be used if there is a transaction value. 

HMRC will publish a notice outlining the unit prices that will apply at the end of the transition period for relevant fruit and vegetables. The unit prices will be updated every 14 days to reflect price fluctuations. Unit prices that apply up to the end of the transition period can be found on Integrated Tariff of the European Union

Valuation Method 5

Information about the cost or value of the items must be provided. This information must be based on the producer’s commercial accounts. These accounts must follow the generally accepted accounting principles which apply or have substantial authoritative support in the country where the goods are produced. In addition, information about the producer’s profit and general expenses should be provided. 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, and
•  for export to the UK

Valuation Method 6

A valuation must be arrived at by using reasonable means consistent with the World Trade Organisation valuation principles. Method 6 is the fallback method and can only be used where none of the earlier methods directly apply. Where aspects of the other 5 methods of valuation are applied, the evidence required is the same as laid out in the specific method used.

There is no cost to exploring your options. We’ll be happy to help and if we can’t, we’ll point you in the direction of someone who can. To discuss the valuation of your transactions, arrange a call: info@alegrant.com.