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Customs Valuation Policy

The World Trade Organisation has established Article VII of the General Agreement on Tariffs and Trade which facilitates a consensus on the obligations concerning customs valuation for customs duty across the 162 member nations that have ratified the agreement. 

HMRC Notice 252 is an explanation of the methods to calculate duty on goods imported into the UK relevant to UK importers and their clearing agents.

It identifies the different ways to calculate:

  • the value for Customs Duty

  • the value for import VAT

  • the value for trade statistics

and identifies the circumstances in which they maybe applied. 

Alinea Customs can work with your organisation to provide an effective customs valuation policy and deliver in house training. Our Customs Valuation check list is free to download from: here.

Customs valuation and valuation for VAT

Customs valuation for customs duty will be established on the sequentially applied methodologies set out in HMRC Notice 252. 


  • freight and insurance charges to the UK border, and

  • all packaging and handling fees including the cost of the export declaration 

are included within the customs valuation for customs duty.

Valuation for import VAT will include the customs valuation, and additionally include all associated freight, insurance and handling charges from the port of entrance to the place of destination. 

In 90% of cases the transaction value will be based upon the use of method 1, the price paid or payable for the goods.

However there are certain circumstances when this will not be possible, for example:

Transfer Pricing – when a company sells stock that it owns to a subsidiary company

Cross-border stock transfer between related parties - for example, between distribution centres or to an Amazon warehouse

When sending or receiving samples or free of charge goods

When sending or receiving replacement products

• When using a buying or selling agent

• When renting or leasing goods

For multinational enterprises, the World Customs Organisation (2012) have identified key valuation issues:

• Transfer pricing and customs valuation – if the cross-border transfer of stock occurs via a sale to a subsidiary/related company, the organisation should monitor pricing to ensure that pricing at arm’s length has been set. The OECD has developed the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022.

HMRC Notice 252, 28.1 addresses that transfer-pricing studies conducted by independent third parties for corporation tax are acceptable as evidence for customs valuation purposes.

• Third party royalties and licence fees – a situation may occur where a sale takes place under the conditions of method 1, but a payment is made to a third-party intellectual property rights owner, for example a trademark owner to confirm a license to distribute the goods in a particular territory where rights are not automatically exhausted and parallel trade may occur. The buyer is required to pay a royalty fee as a condition of the agreement, either to the seller of the goods or a third party rights owner. If the payment must be made as a condition of the sale of the goods then under the terms of Article 8.1 (c) of the Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 “to the extent that such royalties and fees are not included in the price actually paid or payable.”

Sale for export the assumption of Article 1 of the Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 is based on a situation where normally the buyer would be located in the country of importation and transaction value would be based upon the price paid or payable. The UK legislation that qualifies the information and practical examples provided in HMRC Notice 252 is based upon Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code Article 128 (Article 70 (1) of the Code)”

“1. The transaction value of the goods sold for export to the customs territory of the Union shall be determined at the time of acceptance of the customs declaration on the basis of the sale occurring immediately before the goods were brought into that customs territory.

2. Where the goods are sold for export to the customs territory of the Union not before they were brought into that customs territory but while in temporary storage or while placed under a special procedure other than internal transit, end-use or outward processing, the transaction value will be determined on the basis of that sale.”

(World Customs Organisation, 2012, p.45)

The UK does not currently have a facility to deliver an advanced ruling on customs valuation, although traders are encouraged to call the HMRC customs helpline for assistance.

The World Customs Organisation have outlined that the following questions could be implemented with an internal framework on customs valuation compliance within a commercial enterprise.

- Is a particular royalty or license fee, paid in association with an importation, includable in the Customs value under Article 8.1 (c) of the Agreement?

- Is a commission paid to an agent or broker deemed to be a buying or selling commission under Article 8.1 (a)?

- In a situation where multiple sales have taken place, which transaction is considered to meet the criteria of Article 1.1 for the imported goods?

- In a situation where buyer and seller are related within the meaning of Article 15 of the Agreement, has the price been influenced by the relationship?

- Where a transaction value cannot be applied (e.g. in the absence of a sale) which alternative method is appropriate to use?

For further information on how your organisation may be impacted by customs valuation, pleased contact our consultancy team. 

Further resources


HMRC Guidance and practical examples


Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, 22 December 1994


World Customs Organisation (2012). 3 Practical Guidelines Valuation Control

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