Additional case studies of interest
Source: gov.uk (2025-06-25)

Additional case studies of interest.

Valuing cats and dogs imported free of charge for re-homing

In instances where a cat or dog is being imported for re-homing in the UK and as such there has been no sale, Method 1 cannot be used as there is no transaction value. It would be highly unlikely that Method 2 or 3 could be used. Method 4 cannot be used as cats or dogs imported for re-homing in this way, are not sold in the UK. They are rehomed for a contribution, which is often less than the cost of the upkeep and medical care received while in the UK, prior to being rehomed. It would not be possible to determine the required costings for a Method 5 valuation.

HMRC have determined that in this situation a Method 6, applying Method 3 flexibly, should be used with the standard values of £115 for a cat and £215 for a dog. These standard values are based upon analysis undertaken by HMRC of values accepted by customs for similar items (other cats and dogs).

Waste and scrap

Valuing imported waste and scrap

Generally speaking, the standard rules of valuation will apply to waste when imported into the UK, and unless the waste comes under a specific ‘waste’ classification (for example, municipal, plastics or wool) on the Trade Tariff, would be classified under the good it originally formed. However, there are different possibilities depending on the goods, type of ‘waste’ and the scenario, whether it is scrap, whether there has been a sale at some point, and what it is being exported for.

Waste is usually imported into the UK as:
- waste containing recoverable materials
- waste to be further processed
- waste to be destroyed or neutralised
As with other goods, the importer will have to determine a value for the waste, working through the general rules of valuation (valuation Methods 1 to 6). However, importation of waste into the UK may also be subject to special legislation that can influence the elements to consider in determining the customs value. If goods to be processed are placed under an inward processing customs procedure and subsequently released to free circulation, the value should be determined using the general rules of valuation.

Method 1

Imported waste may be the subject of a sale of goods contract, in which case the price paid or payable for the waste is used as the basis for the customs value under valuation Method 1. Waste containing recoverable materials usually falls under Method 1 - for example, scrap iron from a third country, sold for import into the UK under a sale of goods contract and released for free circulation in the UK, to be used in the production of steel.

Waste to be further processed in the UK (for example, spent catalysers imported into the UK with the aim to extract and sell the metals contained within) is usually placed under Inward Processing. If the processed products resulting from the waste are released for free circulation in the UK, their customs value is determined in accordance with the general rules on customs valuation.

Waste imported into the UK to be destroyed or neutralised (for example, destruction of dangerous waste) is usually not the subject of a sale for import to the UK as the exporter pays the importer for destruction services.

In practice, due to the absence of a sale for export, it will be appropriate to determine the customs value for waste imported into the UK under one of the secondary valuation methods.

Methods 2 or 3

To apply Methods 2 or 3, it is necessary to identify identical or similar goods sold for import to the UK at the time of, or within a reasonable time period of, the importation of the chargeable goods into the United Kingdom. However, the specificity of waste (its diversity of composition, occurrence in a form mixed with non-recoverable elements) makes it very difficult or even impossible to use the transaction value of identical or similar goods.

Method 4

The application of Method 4 is subject to certain limitations. The method may be used in cases in which the processed products resulting from imported waste are not the subject of a sale before they are placed under release for free circulation. In such cases, the sale price for the processed products obtained when the goods are sold at the first commercial level to unrelated persons may be a starting point for the calculation of a unit price to be used to determine the customs value.

Method 5

This method would not be applicable to determine the customs value for imported waste because the waste is not produced as such.

Method 6

Considering the limitations in applying the secondary methods described above, in many cases importers will need to rely on valuation Method 6. A value can be determined through a combination of methods 1-5 and in accordance with the rules of Article VII GATT, as per Regulation 126 CIDEER (https://www.legislation.gov.uk/uksi/2018/1248/regulation/126/made). In theory this allows a certain level of leeway for an importer to arrive at a value for their imported waste.

Examples

Example 1

Method 6 may be used in cases in which waste is imported to be destroyed or neutralised in the UK, for example, dangerous or hazardous waste. With goods imported for destruction in the UK, and costs incurred in connection with this destruction, the exporter would pay an amount for these services. As there would be no purchase of the imported goods but, on the contrary, payment made for accepting and destroying them, no sale would have taken place. As the waste is intended strictly for destruction, and without secondary valuable by-products resulting from it, a nominal value for the waste is acceptable.

Example 2

If the processed goods obtained from waste are commodities, for example, metals obtained from spent catalysers, the prices quoted on recognised commodity exchange markets can be a starting point to calculate the customs value under Method 6. Commodity exchange markets are trading platforms where commodities, for example, metals, are sold and purchased by traders. Therefore, prices quoted on such commodity exchange markets should reflect the value of the commodities in question at a given time.

Transportation and insurance costs

The costs of transportation and insurance, and loading and handling charges associated with transportation, incurred up to the place where goods are brought into the UK, shall be included in customs values using a transaction value, as per Regulation 111 CIDEER (https://www.legislation.gov.uk/uksi/2018/1248/regulation/111). As for the secondary methods, the provisions of Regulation 111 are not applicable per se. However, under UK customs legislation the customs value is determined on a cost, insurance, freight (CIF) basis, the general principle in terms of including transportation and insurance in the customs value remains relevant whichever method is applied.

Case study 1 - use of Method 6 for imported waste from fertiliser

Company A registered in the UK provides forwarding services to clients of company B, registered in a third country, by carrying out the storage and transhipment of fertilisers in the framework of free zone procedure in the UK. The fertilisers are transported by rail to the free zone. A tranships the goods onto vessels and then the goods are further transported to final recipients in third countries - B’s clients.

Company A is not involved in contractual arrangements between Company B and their clients. The transhipped fertiliser remains in the ownership of Company B.

Waste from fertiliser (which has fallen on the ground and is mixed with coal, sawdust, and dirt) as a result from the activities carried out by Company A in the free zone. Within the terms of an agreement between A and B, the waste material can be utilised by Company A.

Although the waste does not meet the criteria of the original fertiliser brought into the free zone, it retains the main characteristics of fertiliser and can be used in agriculture.

Company A declares the waste fertiliser for release to free circulation in the UK and immediately after the customs clearance is completed, sells the goods to its Subsidiary C also located in the UK.

The price declared at release for free circulation is the result of a calculation made by Company A. According to Company A, the price reflects the direct costs related to the transport and collection of the fertiliser, administrative costs, and the planned amount of profit.

Having purchased the waste fertiliser, Subsidiary C does not sort, store, pack or process the goods, but removes them immediately from the Free zone using their own vehicles, and then sells and delivers them to final customers.

The customs authorities in the UK perform a post-release control concerning the customs activities carried out by Company A.

In the framework of the control the UK customs authorities establish that the resale price for the waste fertiliser set by Company C was substantially higher than the price at which the goods were acquired from Company A. The significant difference between the declared customs value of the waste fertiliser declared by Company A and the price at which Company C, the company related to Company A, sold the goods to final customers triggers reasonable doubts as regards the reliability of the declared customs value.

Additionally, customs authorities found out that the waste fertiliser was not the subject of a sale for import to the UK. The imported goods were sold just after being released to free circulation. The sale took place between related companies A and C.

There were 2 reasons to question the declared customs value:
- a lack of sale for export
- a significant difference between the declared customs value and the resale price for the waste in the UK
How the customs value of the waste from fertiliser should be determined, in the context described above

In the context of post-audit clearance described above, at the time of the acceptance of the customs declaration, the goods (waste from fertiliser) were not subject to a sale for export. As such Method 1 is not an appropriate method of valuation, and an alternative valuation method has to be used to determine the customs value.

Methods 2 or 3

Considering that the waste fertiliser was composed of various fertilisers from the ground and mixed with impurities, identification of identical or similar goods was not possible. For that reason, neither Method 2 nor 3 are applicable.

Method 4

The deductive method could not be used to determine the customs value of the waste from fertilisers, because Company A sold the goods to its Subsidiary C. A sale to a related person cannot form the basis of a customs value under this method, according to Regulation 123(5) CIDEER.

Method 5

The computed value method could not be used in this case, because the waste did not result from a production process.

Method 6

Therefore, the customs value of the waste from fertilisers should be determined under Method 6.

The price set by company C when selling the waste fertiliser to non-related companies was used as a starting point. Then the price was adjusted by deducting:
- additions usually made for profit and general expenses
- transport, insurance and associated costs incurred within the UK when the goods were transported to final customers
- customs duties and other charges payable in the UK by reason of the import or sale of the goods
These provisions refer to Method 4. In this example the price for the waste fertiliser to a large extent is determined in a way a unit price for customs valuation purposes is established under Method 4. Therefore, when the price for the waste fertiliser is determined, the legal principle in terms of the adjustments to the unit price applicable under Method 4 is to be applied flexibly

By using the above-described methodology the customs authorities established the customs value of the waste from fertilisers.

Toxic waste

Importers specialising in the treatment and disposal of toxic and hazardous wastes sometimes import, specifically for destruction, wastes which are subject to ad valorem duty. In many cases the imported materials will be the residue of products previously sold by the importer and destruction of the residue will have been agreed upon in the original contract of sale.

For such importations invariably the overseas trader makes the only payment involved to the importer for their services in destroying the waste. The overseas trader usually bears the full cost of transport and insurance from their premises to that of the importer, either directly or indirectly. Where the importer appears to bear the cost of transport and insurance (the cover is not normally against loss or damage to the goods but against third party claims for loss or damage caused by the goods) this is usually because the imported goods are the residue of goods previously exported by the importer to an overseas trader. The cost of transport, insurance and destruction of the imported residue will have been costed into the selling price of the original goods.

As the value of these importations cannot be established under Methods 1 to 5, Method 6 must be used.

Having regard to the exceptional circumstances, a nominal value can be applied to the wastes for customs valuation purposes. The inference is that such goods have little or no commercial value. In these circumstances the cost of transport, handling and insurance should not be included in the dutiable value.

In most cases the importer’s valuation of the wastes can be accepted but care must be taken where the importer gains ‘side-benefits’ from processing of the waste products after importation (for example, using the waste as a fuel for heat or power). Such gains should be taken into account when arriving at an acceptable value for duty purposes (for example, the value could be determined by reference to estimated savings in fuel costs).

Company A in the EU is a specialist in the treatment and destruction of toxic and hazardous wastes.

A received from B, a chemical manufacturer established in a third country, wastes chargeable with ad valorem duty under the Tariff and not subject to any duty relief.

B pays A for their services in destroying the waste and also pays the cost of transport and insurance from their premises to those of A, where the goods are destroyed by A without gaining any side-benefits from the process.

As a customs value cannot be determined for wastes under Methods 1 to 5, Method 6 applies.

Having regard to the facts, and particularly that the wastes cannot be absorbed into commercial circulation in the UK, a nominal value can be attributed as a customs value for the waste.

Human tissue or other products of human origin

Human blood, tissue, other blood fractions and immunological products are exempt from Import VAT and attract a 0% rate of customs duty. However, a customs value must be declared at the time of importation. To arrive at the import valuation, customs valuation methods are to be followed in sequential order, as with all imports.

If there is no sale for export available to base customs value on, valuation Method 1 cannot be used. In the absence of historic Method 1 valuations, Methods 2 and 3 cannot be used either. As human blood and tissue are not sold in the UK, Method 4 cannot be used. It is impossible to work out the production costs, hence, Method 5 cannot be used. In these scenarios, the use of Method 6 (1) is viable. There is usually a cost of extraction and international shipping which the importer pays for. The blood products may be valued using the best evidence available, which is the fee paid to the foreign medical facility for the cost of the extraction procedures. Expenses related to the international shipment of the blood products may be deducted from the valuation.