Requirements of the import valuation system and methods for determining the value of goods produced outside the EU, for customs and VAT calculations.
This guide explains the requirements of the import valuation system. It outlines the different valuation methods for determining the value on which customs duty on goods produced outside the EU and import VAT are calculated. It also provides links to sources of further help and advice.
At importation from third countries you must declare the value of your goods to HMRC in the Single Administrative Document (form C88). This value determines the amount of customs duty and import VAT payable and forms the basis of the trade statistics compiled by HMRC.
Declaring an import value
Every time you import a consignment of goods from outside the EU, you must provide HMRC with details of its value – you may also need to provide a valuation declaration.
You must declare the import value on your Single Administrative Document (SAD or form C88). You can find detail on SAD in the guide on declarations and the Single Administrative Document.
SAD forms can be completed manually, or electronically using the Customs Handling of Import and Export Freight (CHIEF) system, although manual submissions usually take longer to process. For more information, see the guide on the UK’s import and export processing system CHIEF. You can make electronic declarations using a Government Gateway user ID and password. If you do not have a user ID, you can create one when you use the service.
The Import Control System (ICS) is the first phase of an Automated Import System (AIS) that will apply across the EU, streamlining processes and bringing new safety and security requirements to SAD completion. For more information on ICS and AIS see the guide: Import Control System.
How import value is used
There are 3 main reasons why HMRC need to establish a value for imported goods:
- customs duty – often charged as a percentage of the value of goods and known as ‘ad valorem’ duty
- import VAT – also calculated as a percentage of the value of your goods, plus other expenses and any customs duty
- trade statistics – arrived at using the customs valuation rules
The main method of calculating import value
There are 6 methods you can use to calculate your import valuations. Method 1 is the first method you must try. It applies to over 90% of import consignments.
Method 1 is the ‘transaction value’ method. This is based on the price paid or payable by a buyer to a seller for the imported goods when sold for export to the EU. You’ll need to provide evidence of the price paid with your import entry, such as a copy of the seller’s invoice.
What to include in your Method 1 calculation
If they’re not already included in the seller’s price, you must add the costs of:
- delivery to the EU border
- most commissions (except buying commission)
- royalties and licence fees paid by you on the imported goods as a condition of sale
- containers and packing
- any proceeds of resale the seller will receive
- goods and services you provide to the seller for free or at a reduced cost – such as, components incorporated in the imported goods, or development and design work carried out outside the EU and necessary for the production of the imports
If you import goods from a processor – that is a business that assembles or otherwise works on one or more sets of existing products to create your new imported products – transaction values can be built up by adding to the processing costs the value of any materials or components you provided to the processor.
What to exclude from your calculation
Items to be left out of the customs value if certain conditions are met include:
- delivery costs within the EU
- EU duties or taxes
- taxes paid in the country of origin or export
- quantity and trade discounts and those relating to cash and early settlement, that are valid at the time the goods are valued
- dividend payments to the seller
- marketing activities related to the imports
- buying commission
- export quota and licence costs
- interest charges
- rights of reproduction
- post-importation work – construction or assembly
- management fees
When does Method 1 not apply?
Method 1 cannot be used if the goods are imported on consignment, there has been no sale, or they’ve been supplied free of charge or on loan.
Other methods of calculating import value
There are 6 methods for calculating the value of imported goods to assess the amount of customs duty and import VAT you have to pay. The same value is also used for trade statistics.
All 6 methods are outlined below and should be tried in order. If Method 1 does not apply to you, try Method 2. If that does not apply, try 3 and so on. However, Method 5 can be tried before 4.
|Calculate on the basis of…||Try the next method if…|
|Method 1||the transaction value – the price payable to the seller||there has been no sale of goods|
|Method 2||the customs value of identical goods, produced in the same country as your imports||there are no identical goods|
|Method 3||the customs value of similar goods, which must be: produced in the same country, able to carry out the same tasks and commercially interchangeable||there are no similar goods|
|Method 4||the selling price of the goods (or identical or similar goods) in the EU||there are no EU sales of the goods|
|Method 5||the production cost of the goods, including the cost of any materials, manufacturing and any other processing used in production||this production cost information is unavailable|
|Method 6||reasonably adapting one of the previous methods to fit unusual circumstances||N/A|
You can read Notice 252: valuation of imported goods for customs purposes, VAT and trade statistics the guide to import value calculation methods, this includes details of the evidence HMRC needs to support each method.
The 2 schemes below apply specifically to fruit and vegetables. However, only one of the 2 may be used and this will depend on a number of factors including the type of produce, the method of import, and the time of the year.
Simplified procedure values (SPVs)
SPVs are customs values based on prices obtained daily from designated marketing centres within the EU. The average prices are published fortnightly and can only be used for whole fruit and vegetable produce, of a single kind, imported on a consignment basis. If the imported goods have been the subject of a sale between a buyer and seller, and thus have a transaction value, the SPV system cannot be used to determine a customs value. You must use Method 1 and the actual transaction value for that particular importation.
As an alternative to using the SPV system, you can use Method 4b for goods imported on consignment.
SPVs apply to whole fruit and vegetables, not produce that has been cut and diced. You can find a list of produce to which SPVs do apply, or on the CHIEFNoticeboard.
Standard import values (SIVs)
SIVs is an entry price system that can also apply to named fruit and vegetables during defined periods of application. You can find further details in the Customs Tariff, Volume 2, Section 11 or download the Annex to Regulation 1580/2007 from the Europa website (PDF, 642K) to find the periods of application.
Updated daily, SIVs set a standard price per 100 kilograms net.
For more information, call the HMRC VAT Helpline.
Value for import VAT
As well as using the import value to calculate the customs duty payable on your imported goods, HMRC also uses that value as the basis to calculate import VAT.
Import VAT is the transaction tax levied on all goods imported into the UK from outside the EU.
When to submit a valuation declaration for VAT purposes
You do not need to submit a separate valuation declaration if you have already submitted one for customs duty purposes.
If you do not need to submit a declaration for customs duty purposes, you’ll only need to submit one for VAT purposes if your consignment’s value exceeds £6,500 and any of the following conditions apply:
- the importer is not VAT-registered
- the importer is VAT-registered and either
- the goods are not for the purpose of the business
- deduction of input tax would not be allowed
How to calculate the value for VAT purposes
To calculate the value for import VAT you must add all of the following items to the goods’ value for duty, unless they have already been included:
- all incidental expenses incurred up to the goods’ first destination in the UK, such as, commission, packing, transport and insurance
- all such incidental expenses that result from transporting the goods to a further destination within the EU (if that destination is known when you import the goods)
- any customs duties or levies payable on import to the UK
- any excise duties or other charges payable on import to the UK
Import value for trade statistics purposes
HMRC uses your import value to compile the UK’s trade statistics. You do not need to complete a separate form to declare a value for trade statistics – you simply declare the value in box 46 of the SAD or form C88.
Value for trade statistics when customs duty is chargeable
If ad valorem customs duty is chargeable as a percentage of the value on your imported goods, then the value you have to declare for statistical purposes will be the same as the value calculated for customs purposes.
Value for trade statistics when customs duty is not chargeable
If ad valorem customs duty is not chargeable on your goods, then the value to declare for trade statistics purposes will be based on the price paid or payable to the seller. However, a number of adjustments must be made.
The following items should be added to the price paid or payable when calculating the value for trade statistics:
- any other costs, charges and expenses connected with the sale and delivery of the goods to the port or place of importation in the UK
- selling commission (except where incurred in the UK)
The following items should be left out of the calculation:
- transport costs within the UK
- buying commission
- selling commission incurred in the UK
- duties or taxes chargeable in the UK
Where to find information on the valuation of imported goods
Calculating the import value and declaring it to HMRC is a complex area. However, if you need help, HMRC provides a range of support services.
HMRC guidance publications
The following publications will expand on the information in this guide:
- Notice 251: Valuation Declarations and Statements – this explains the types of declarations, when they are required and how to complete them.
- Notice 252: Valuation of imported goods for customs purposes, VAT and trade statistics – this explains the 6 methods you can use to calculate the value of your imports. Read Notice 252.
If your queries are not answered by the publications listed above, you can call the HMRC VAT Helpline. This service can help you with any problems related to import valuations in particular, or other customs-related aspects of international trading.