G/VAL/Q/GBR/5  
 
26 April 2023  
(23-2941) Page: 1/3 
Committee on Customs Valuation  Original: English  
 
NOTIFICATION UNDER ARTICLE 22 OF AGREEMENT  ON IMPLEMENTATION  
OF ARTICLE VII OF THE GENERAL AGREEMENT  
ON TARIFFS AND TRADE  1994  
REPLIES  FROM THE UNITED KINGDOM TO QUESTIONS FROM CHINA  REGARDING  
DOCUMENT S G/VAL/ N/1/GBR/1 AND G/VAL/ N/2/GBR/1 
UNITED KINGDOM  
The following communication, dated 19 April 2023 , is being circulated at the request of the 
delegation of the United Kingdom . 
 
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The UK would like to thank China for their questions on the United Kingdom notification of its customs 
valuation legislation contained in document G/VAL/N/1/GBR/1.  
 
QUESTION  1: 
 
The Customs (Import Duty) (EU Exit) Regulations 2018 PART 12 CHAPTER 5 124(2)  provides that 
"The valuation of the goods is to be determined by reference to the wholesale price of the goods at 
the date of import, being the price as set out in a notice published by HMRC ".  
 
However, according to the CVA, the primary basis for customs value should be "transaction value"; 
alternative methods should be used in sequential order where transaction value method is not 
applicable; the use of arbitrary or fictitious customs value should be precluded.  
 
Could the United Kingdom explain or clarify:  
 
Question 1.1 : 
 
Whether method 4 set out in regulation 124 is in accordance with the principles of the CVA;  
 
Response : 
 
Method 4 set out in Regulation 124 is in accordance with the principles of the CVA as there has been 
no sale for export to the UK and therefore the fruit and Vegetables are being imported on 
consignment.  
 
Question 1.2 : 
 
Whether  regulation 124 implements any provisions of the CVA;  
 
Response : 
 
Regulation 124 implements Article 5 of the CVA. Most imports of fruit & veg are valued under the 
transaction method (Method1) - if there has been a sale for export of the goods to the UK. If no sale 
has taken place it means that the goods have been imported on consignment and Method 1 can't be 
used.  
 G/VAL/Q/GBR/5  
 
- 2 - 
 
  For goods imported on consignment the importer has the option of valuing their goods under Method 
4 - in two ways.  
 
Option 1 - By using the account sales procedure.  
This involves entering the goods on deposit and within 90 days providing customs with details of the 
sales invoices to adjust the deposit taken.  
 
Option 2 - By using a Simplified Procedure Valu e (SPV).  
 
These are customs values derived from prices realised on sales in specified marketing centres in the 
UK. A variety of deductions are made from these prices to arrive at an average sterling value per 
100 kilogram net for each product covered by the scheme.  
 
Question 1.3 : 
 
How the wholesale prices of the fresh fruit and vegetables (published by HMRC)  are formulated?  
 
Response : 
 
The formula we use for these deductions are: a profit margin of 15%, £6 per 100kg weight for UK 
freight & insurance costs and the percentage of included duty.  
 
The rates change fortnightly and published on our website:  
 
https://www.gov.uk/guidance /check -simplified -procedure -value -rates-for-fresh-fruit-and-
vegetables  
 
QUESTION  2: 
 
Article 8.1(c) of the CVA states that, royalties and license fees to be added to the price paid or 
payable for the goods shall be related to the goods and  constitute a condition of sale of imported 
goods. In other words, there are two conditions for the inclusion of royalties in customs value, which 
are "related to the imported goods " and "constitute a condition of sale ". Could the United Kingdom 
clarify wh ether its valuation legislation implements Article 8.1(c) of the CVA?  
 
Response : 
 
Yes our valuation legislation implements Article 8.1 (c) of the CVA. Regulation 113 of the Customs 
(Import Duty) (EU Exit) Regulations 2018 states the following:  
 
The items referred to in regulation 108(7)(a) as specified matters to be included as elements of a 
transaction value further include a royalty or licence fee payable by the buyer to the seller where : 
 
(a)the royalty or licence fee is payable when the buyer sells the goods; and  
 
(b)such payment forms part of the agreement between the buyer and seller for the import of 
the goods into the United Kingdom.  
 
(2) The value of the royalty or licence fee is, if it can be readily determined, the amount 
payable.  
 
Regul ation 113 is supported by section 32 of our public notice 252 Notice 252 . 
 
QUESTION 3: 
 
According to information provided in G/VAL/N/2/GBR/1 (checklist of issues), the UK has responded 
to "1. Questions concerning Article 1, (a) Sales between related persons ". We noticed, in particular, 
the following points:  
 
- "(ii) the UK will consider the d etails of the sale to decide if influencing has occurred ". G/VAL/Q/GBR/5  
 
- 3 - 
 
  - "(iv)  the UK will consider the details of the sale to determine if any relationship between the 
buyer and seller has influenced that transaction value ". 
 
The Customs (Import Duty) (EU Exit) Regulations 2018 PART 12 CHAPTER 2 108(9) provides  that 
"HMRC may presume that where the buyer and seller of chargeable goods are related persons, in 
the application of Method 1 valuation, the transaction value of the goods is not the full value unless 
HMRC are satisfied to the contrary ". 
 
Could the United Kingdom explain or clarify:  
 
Question 3.1: 
 
Whether the provisions regarding "examination of circumstances surrounding the sale " as specified 
in Article 1.2 （a）and "test values " in Article 1.2  (b) are reflected in the UK’s legislation;  
 
Response : 
 
We can confirm that Article 108(9) of CIDEER provides for the provisions regarding “examination of 
circumstances surrounding the sale “as specified in Article 1.2 (a) and “test values” in Article 1.2 (b) 
as this legislation is general in nature and therefore  provides the necessary scope for challenging in 
situations where we are not satisfied that Method 1 can be used. In these circumstances it will be 
up to the declarant to justify the use of Valuation Method 1 and if we are not satisfied propose 
alternative s.   
 
The application of Article 108 (9) is covered by Section 28 of our notice 252 (link above) which 
provides guidance on examination of circumstances and test values when UK customs consider that 
the relationship may have influenced the price paid or pa yable.  
 
Question 3.2: 
 
The process for "examination of circumstances surrounding the sale "; 
 
Response : 
 
The process for examination of the circumstances the sale would involve UK customs requesting 
documents and information from the Importer/Declarant rega rding the sale. The information and 
documents would include Pricing policy, Annual contracts, Purchase orders, Price lists, Invoicing, 
Financial settlement and In year and end year adjustments. We would also have the option of using 
benchmarking studies to  assist in accessing the evidence provided.  
 
Question 3.3: 
 
The criteria for "examination of circumstances surrounding the sale ". 
 
Response : 
 
The criteria we would use for examination of the sale would be as follows:  
 
Does the seller also sell the same goods to unconnected parties at the same price? if so does this 
mean that the related buyer does not get an advantageous price?  
 
Does the seller offer a special price to related parties? This may be in the form of an intra -group 
transaction price (or disco unt against the standard sales price) which is not available to unrelated 
buyers  
 
Does the seller agree a price with the buyer that is consistent, contractually, with a third -party 
buyer? For example, a contract between a manufacturer setting a price in th e same way as for third 
party sales where full costs of production are taken into account as well as an appropriate level of 
profit.  
 
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