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Valuation of imported goods for customs purposes

How to apportion the cost of tools & dies etc

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HMRC notice 252 para 3.15 d(ii) states:

"You must add the following to the price you pay (unless they are already included):

(d) Goods and services provided free of charge or at reduced cost by the buyer. If you provide, directly or indirectly, any of the following, you must include in the customs value any part of the cost or value not included in the price charged to you by the seller:

(ii) tools, dies, moulds and similar items used in producing the imported goods, for example, tooling charges - there are various ways of apportioning these charges"

Does anyone know where HMRC gives any further information about the "various ways of apportioning these charges"?

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By WhichTyler
19th Jun 2019 08:57

The fact that they don't (even in the manuals) suggests that a reasonable, easily understood method would be acceptable as long as it is based on the reality of the transaction concerned. So if it's a one off prototype or bespoke order it picks up all the tooling charge; if it's a production sample it gets a proportion based on the batch/order qty. You know the details better than I do and check with your external accountant's VAT partner...

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By paul.benny
19th Jun 2019 09:00

I would expect HMRC to accept whatever reasonable basis you use for your own cost accounting as long as it can be expected to recover the full tooling cost over time.

In my experience, this requirement is widely overlooked because the manufacturer does not include these costs in the declared values.

On a related point, if you've supplied any tooling or components to the manufacturer, you can claim outward processing relief on the cost.

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