Not any value, but a compliant value, based on the Customs Notice 252. A separate notice does not exist for export valuation, so whichever direction the goods are moving, this is the reference point to apply.

It is not solely about declaring a compliant value. Why the declared value applies needs consideration. What evidence can the trader supply, if challenged by Customs during an audit? The trader must hold proof of valuation within their records.  

The most popular reason for an export or import is because goods have a buyer. The seller needs to export the goods to their overseas buyer, or as the buyer, we have decided to procure the goods from a supplier based outside the United Kingdom. 

The seller’s valuation will need to include the Insurance and Freight costs at Import. Two exceptions to this rule are US and Australian Customs, who require the ‘FOB’ import value declared. This information takes us directly to Incoterms and where FOB applies, but here simply put, the Freight and Insurance elements are not part of the duty calculation.       

Valuation Method 1 applies as the Transaction Value - the price paid (or payable) by the buyer of the goods. The seller can evidence the value by providing a copy of their Sales Order, Contract and Invoice. The buyer could provide their Purchase Order. HMRC could ask for further evidence by requesting proof of payment against the supporting supplier and buyer commercial documentation.   

Sales a Transfer Price.

Valuation Method 1 can apply if there is a sale between related parties, but it must be clear to Customs that the relationship has not affected the agreed price. The trader could supply evidence that the price paid (or payable), is also available to a non-related party for identical or similar goods, to justify the value is true and compliant.  

HMRC state that an ‘Arm’s Length’ price must apply. HMRC define an ‘Arm’s Length’ price as a commercial sale where the seller and buyer act independently, without one party influencing the other.

The relationship between the two parties cannot affect the price and HMRC must agree to the applied valuation.

HMRC provide test criteria within the customs notice, to allow the trader to ascertain the validity of a valuation.

How about samples? Sometimes a trader may decide to quote a nominal value, potentially at the request of the customer. 1 Euro, 2 Pounds, 5 US Dollars? This is common where there is no charge, or invoice to the recipient for the goods. This can apply for a new product to an existing customer, or a new client to win the first order. If exports requiring a statistical value and no duty generally when goods leave the UK, then how does a lower value make any difference, aside from the skewed export value?

One parties’ export is another parties’ import.  If 1 Euro is not justifiable to Customs, then the amount of duty paid at import is non-compliant. If a customer (or potential customer), is not paying for the product, that does not mean that the value is still correct, in line with the valuation rules.     

HMRC are clear on what constitutes a commercial sample. Do not consider a pair of shoes, but a single shoe. This shoe would require an indelible mark as a ‘Commercial Sample’ to qualify. The alternative or additional consideration is the fact the goods need altering. Specifically torn, altered, perforated, slashed or defaced. Importers should obtain guidance from HMRC to obtain clarity on goods qualifying for commercial samples.  

Although there are instances where individual countries interpret the World Trade Organisation valuation rules differently, in certain instances, the same regulations apply in every member’s rules. It is imperative that the UK trader must ensure that the values they declared to HMRC are compliant.     

The valuation questions relevant at Import under CDS (the Customs Declaration Service), have been well documented. Although the interface to declare goods to HMRC is changing, the rules of compliance have not altered.  

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

Valuing Goods for Customs Purposes

Customs Compliance Review

Company Audit / Health Check