Whilst there aren’t any export duties in the UK, VAT-registered companies are permitted to zero rate their exports, rather than incur the 20% rate of VAT, for which they must obtain official or commercial evidence.
Many companies believe they can declare a nominal value on their commercial invoice and subsequently on declarations when they export a sample or a free replacement item. There are also cases of companies deliberately undervaluing their exports, enabling the importer to pay fewer duties and taxes upon importation.

So, what is the HMRC legal definition regarding valuation at export? The Tariff quotes the following:

“The value to be declared is the cost of the goods to the purchaser abroad (or if there is no sale, the price the goods would fetch if sold to a purchaser abroad); it should include packing, inland and coastal transport in the UK, dock dues, loading charges and all other costs, profits, charges and expenses”.

For example, the export value should include any insurance and commission accrued on the journey up until the goods are deposited on-board the exporting vessel or aircraft. Outward sea/air freight, marine/air insurance, and any cash or trade discounts to the purchaser abroad, must be deducted from the export invoice value.

For goods re-exported after process or repair in the UK, the value declared must include the charge for the process and the value of the goods when imported.

On the other hand, there could be a genuine reason why a product has a low export value. For example, a plastic vial that costs less than £10 to replace. However, be mindful that the eyes of an HMRC Officer could be drawn to low-value exports and request evidence from you to demonstrate how you reached that particular value.

HMRC officers can request further information at audit, such as bank statements to evidence the payments made for your exports. HMRC officers also speak to other Customs authorities via a mutual understanding agreement.

To look at it from another perspective, you may remember the Hoegh Osaka vessel that ran aground in January 2015 on its way from Southampton to Bremerhaven carrying high-end cars.  As the exporter of these vehicles, you should ensure that your insurance covers the total value of the goods in case such mishaps occur.

Anyone who has ever submitted an insurance claim will know that insurance companies are meticulous in requesting numerous forms of evidence to justify a lawsuit. Just imagine if
you’d deliberately undervalued the cars on your export declaration that the insurance company had requested.

In conclusion, whilst less complex than import valuation, export valuation is still essential in compliance with our declarations.

Think Export. Think compliance!

While you are here, you may be interested in some Strong & Herd LLP training courses related to this topic:

How to Complete Customs Entries  🔊 A brand new course for 2023, designed to give a general overview of the information required to complete customs entries into the UK Customs Declaration Service (CDS). Learners will understand what Data Elements are and how these fields work together to create a customs declaration. It will illustrate the different entry groupings, the additional codes and where to get further information on these codes, as well as the payment options for import taxes.

Focus On: Embargoes, Sanctions and End-Use Controls 🔊 A brand new half-day session that examines why companies and their employees should be aware of embargoes and sanctions. Using the UK regulations as the main guide, it will review the growth in sanctions on Russia, as well as current financial sanctions in place managed by OFSI. Violating these controls can result in fines, a loss of reputation and criminal charges. It concentrates mainly on the export of goods and includes a look at end-use, end-user and transit controls.

Focus On: Understanding Free Trade Agreements With the UK developing new independent trade arrangements both to encourage the export and import of goods and services from affiliated markets, this session is a must. Some knowledge of customs regulations is recommended or attendance on courses introducing this topic. This course looks at the structure of new and old UK international trade agreements, the key rules of origin and how to understand the whole agreement coverings goods, services and other trade issues.

International Trade Compliance Manager - Face-to-Face Event in Manchester This popular workshop is aimed at anyone involved in international trade and customs compliance within a business. Whether from a management or administrative point of view, this course will illustrate how to promote a strong "compliance culture" throughout an organisation. It assists in the understanding of international regulations and how to establish performance metrics (KPIs). Covers: classification, valuation, origin, duty minimization schemes, licences, AEO and audits.

Focus On: Incoterms® 2020 Rules Trading goods worldwide exposes companies to greater risk & cost in the form of lost goods or unnecessary delays or disputes. Simple allocation of responsibilities in the supply chain can help – and this is what Incoterms® Rules have been doing since 1936. Generally misunderstood, join us in this interactive workshop to check if you are using them correctly and wisely.