Method 3 - Transaction value of similar goods
Source: gov.uk (2025-06-25)

Information about method 3, transaction value of similar goods.

Introduction

As per Regulation 121 CIDEER (https://www.legislation.gov.uk/uksi/2018/1248/regulation/121), Method 3 is the third method an importer must try when valuing their goods if Method 1 and 2 are not appropriate. It is based on the customs value of similar goods imported into the UK at the time of, or within a reasonable period of, the importation of the chargeable goods into the United Kingdom.

In the vast majority of instances, Method 3 is used when the similar goods to be valued under both Method 1 and 3 are entered on the same declaration for free circulation. In such circumstances the evidence provided with that declaration can be used to establish both the customs values. Method 3 is rarely used because of the practical difficulties in obtaining appropriate evidence. Normally importers can only obtain details of importations of similar goods from their own records or those of a related importer in the UK.

Similar goods must have been produced in the same country as those being valued. They must also have similar characteristics and contain similar materials. They must also be the similar in all respects, such as physical characteristics, quality, and reputation. Minor differences in appearance do not matter. If the producer of the Method 3 goods does not produce Method 1 goods, another producer’s goods may be used for comparison. This is set out in Regulation 127 CIDEER (https://www.legislation.gov.uk/uksi/2018/1248/regulation/127/made).

If there are no similar goods, Method 3 cannot be used. Instead, Method 4 or 5 must be tried.

As outlined in Regulation 122 CIDEER (https://www.legislation.gov.uk/uksi/2018/1248/regulation/122/made) in order to arrive at the customs value, the importer must base this on a customs value of similar goods already accepted by HMRC under Method 1. The transaction being used must have been made by the same seller as the seller of the goods being valued. Where no such sale exists at the time of, or within a reasonable time period, a sale must have been made by a seller who is at the equivalent commercial level as the seller of the goods being valued.

The transaction being used must have been made to the same buyer as the buyer of the goods being valued. Where no such sale exists at the time of, or within a reasonable time period, a sale must have been made to a buyer who is at the equivalent commercial level as the buyer of the goods being valued. The transaction being used, must be the nearest in time to the time the goods being valued are imported and must be of an equivalent quantity.

It would not be practical to accept a 90 day transaction for comparison purposes for a commodity, which is subject to sudden and considerable price fluctuations. Regardless of the age of the transaction of similar goods used for comparison, the material time for the valuation of the goods to be valued remains as the time of declaration to free circulation. If more than one such sale is identified, the sale which produces the lower or lowest valuation is the transaction value to be applied.

If there are no sales at the same level or in the same quantity, sales at a different commercial level or in different quantities can be used. But when arriving at the customs value the effect these differences have on the price, must be taken into account. When examining and comparing transactions involving quantity differences, care must be taken in situations where the price may be the subject of a conditional or retrospective discount. At the time of declaration, it is unlikely that the transaction value of either the similar goods or the goods to be valued will have taken into account such discounts. Therefore, it may be necessary to make a price adjustment before deciding whether or not an adjustment for quantity is required and to what extent. Any such action will have to be taken at the post-clearance stage.

Differences between the costs of delivering the similar goods and delivering the goods to be valued must also be taken into account.

Evidence of similar goods where Method 1 has been accepted by UK customs, must be produced. This can be in the form of a copy of the import declaration, or the necessary data to enable HMRC to trace the declaration. This declaration must relate to similar goods imported into UK at the time of, or within a reasonable time period of the goods to be valued. This is to ensure that the goods to be valued and the similar imported goods will have been imported into the UK within a timescale in which the price of the goods would not have changed. This is outlined in Notices made under the Notices Made Under the Customs (Import Duty) (EU Exit) Regulations 2018 (https://www.gov.uk/government/publications/notices-to-be-made-under-the-customs-import-duty-eu-exit-regulations-2018/notices-made-under-the-customs-import-duty-eu-exit-regulations-2018#the-following-paragraph-has-force-of-law-by-virtue-of-regulation-1272-of-the-customs-import-dutyeu-exit-regulations-2018) and Regulations 121 (https://www.legislation.gov.uk/uksi/2018/1248/regulation/121/made) and 122 CIDEER (https://www.legislation.gov.uk/uksi/2018/1248/regulation/122/made).

The Method 1 transaction to be used for comparison purposes will be evidenced by a copy of the declaration for free circulation. However, where the declaration is not available, alternative evidence that may be considered includes:
- the relevant invoice
- the name of the import vessel or flight details
- the date that vessel reported in the UK or flight landed
- the place of discharge in the UK
- the Bill of Lading number
If similar goods are to be valued under both Method 1 and Method 2 for example, if some of the goods are sent free of charge, and they are entered on the same import declaration, the evidence provided with that declaration can be used to establish both the customs values.

HMRC may require a copy of the producer’s price list where differences for level or quantity have to be taken into account.

Examples of adjustments for level and quantity

Example 1 - same commercial level and quantity, no adjustment required

Scenario

A wholesaler who imports 2,000 articles for which method 1 cannot be used.

They can produce a customs declaration for 2,000 articles of similar goods imported by a wholesaler. This declaration has been accepted by HMRC under Method 1. The customs value is 10 units per article CIF.

Valuation treatment

As the quantity and commercial level are the same no adjustment is needed. The value of 10 units per article CIF is acceptable as the customs value under Method 3.

Example 2 - same commercial level but different quantity, no adjustment required

Scenario

A wholesaler who imports 2,500 articles for which Method 1 cannot be used.

They can produce a customs declaration for 2,200 articles of similar goods imported by a wholesaler. This declaration has been accepted by HMRC under Method 1. The customs value is 10 units per article CIF.

It has been established that the supplier of the similar goods sells at 10 units per article CIF to wholesalers regardless of quantity ordered.

Valuation treatment

As the commercial level is the same and the quantity ordered does not affect the price no adjustment is needed. The value of 10 units per article CIF is acceptable as the customs value under Method 3.

Example 3 - different commercial level and quantity, no adjustment required

Scenario

A wholesaler who imports 2,000 articles for which Method 1 cannot be used.

They can produce a customs declaration for 1,700 articles of similar goods imported by a retailer. This declaration has been accepted by HMRC under Method 1. The customs value is 10 units per article CIF.

It has been established that the supplier of the similar goods sells at 10 units per article CIF regardless of the quantity ordered and the commercial level of the customer.

Valuation treatment

As the commercial level and the quantity ordered does not affect the price no adjustment is needed. The value of 10 units per article CIF is acceptable as the customs value under Method 3.

Example 4 - same commercial level but different quantity, adjustment required

Scenario

A wholesaler who imports 1,700 articles for which Method 1 cannot be used.

They can produce a customs declaration for 2,300 articles of similar goods imported by a wholesaler. This declaration has been accepted by HMRC under Method 1. The customs value is 4.75 units per article CIF.

It has been established that the supplier of the similar goods sells at different prices depending on the quantity ordered. The price list shows that for:
- less than 2,000 articles the price is 5 units
- 2,000 articles or more the price is 4.75 units
Valuation treatment

As the commercial level is the same no adjustment is required for level. An adjustment is required for quantity. The price list shows that the price of 1,700 articles is 5 units per article. Therefore, the value of the similar goods must be increased by 0.25 units per article. The value of 5 units per article CIF is acceptable as the customs value under Method 3.

Example 5 - different commercial level but the same quantity, adjustment required

A wholesaler who imports 2,800 articles for which Method 1 cannot be used.

They can produce a customs declaration for 2,800 articles of similar goods imported by a retailer. This declaration has been accepted by HMRC under Method 1. The customs value is 2.5 units per article CIF.

It has been established that the supplier of the similar goods sells at different prices depending on the commercial level of the customer. The price list shows that for wholesalers a 20% discount is given. Retailers pay the list price.

Valuation treatment

As the quantity is the same no adjustment is required for quantity.

An adjustment is required for commercial level. The price list shows that a wholesaler receives 20% discount. Therefore, the value of the similar goods must be decreased by (2.5 × 20% = 0.5) 0.5 units. The value of 2 units per article CIF is acceptable as the customs value under Method 3.

Example 6 - different commercial level and quantity, adjustment required

Scenario

A wholesaler who imports 2,500 articles for which Method 1 cannot be used.

They can produce a customs declaration for 1,500 articles of similar goods imported by a retailer. This declaration has been accepted by HMRC under Method 1. The customs value is 2.5 units per article CIF.

It has been established that the supplier of the similar goods sells at different prices depending on the quantity ordered. A 20% discount is also given to wholesalers. The price list shows that for:
- less than 2,000 articles the price is 2.5 units
- 2,000 articles or more the price is 2 units
Valuation treatment

An adjustment is required for quantity. The price list shows that the price of 2,500 articles is 2 units per article therefore the value of the similar goods must be decreased by 0.5 units per article. Also, an adjustment is required for commercial level. The wholesaler receives a 20% discount therefore, the value of the similar goods which has already been adjusted for quantity (2 units per article) must be decreased by (2.0 × 20% = 0.4) 0.4 units.

The value of 1.6 units per article CIF is acceptable as the Customs value under Method 3.