Hot on the heels of the German Federal Fiscal Court’s publication of its final decision in the Hamamatsu case (our blog on that here), UK Customs (HMRC) have today published updated guidance on the customs valuation of imports, replacing its previous guidance (Notice 252).

What jumps out at first glance is a seeming change in policy with regards to the valuation of goods sold between related parties, with HMRC advising “you will not usually be able to use Method 1 [Transaction Value] with a margin-based transfer pricing model.” Margin-based transfer pricing models technically include the resale price method, the cost plus method, and transactional net margin method (“TNMM”). This only leaves the comparable uncontrolled price method and the profit split method from the OECD transfer pricing methods as potentially “acceptable” from a customs valuations perspective. Taking into account the above and the fact that HMRC states that TNMM is the OECD method most commonly used for justifying the transfer pricing of a company, the effects of the new HMRC advice are starting to seem rather far reaching. 

This will likely be cause for concern for the many UK importers which are using such transfer pricing models and basing the customs value of their imported goods on the transfer price (using Method 1). HMRC’s rationale for the change is that “the real economic value for the imported goods cannot be assured at the time when they are sold for export to the UK. This would also lead to uncertainty with any later adjustments.”

We are liaising with HMRC to better understand the background behind this revised guidance and the potential impact of this shift for UK importers.

Stay tuned as we will soon publish additional analysis on the updated valuation guidance.


Rini joined Baker McKenzie after six years with the Canadian government, having worked on Brexit policy, as well in trade and tax litigation. She obtained her legal training with the Canadian government with the Trade Law Bureau and the Department of Justice. Her background in trade matters spans legal advisory, litigation and policy, having worked on free trade agreements, WTO litigation on market access and trade remedies issues. Prior to joining the Canadian government, she was a government affairs associate at one of Canada's most recognizable brands.


Jukka Karjalainen is a partner in the London Tax Department of Baker McKenzie, and co-leads the UK Transfer Pricing practice as well as sits on the Firm's EMEA transfer pricing steering committee. He has 25 years of experience in dealing with transfer pricing and international corporate tax issues from both a private practice and an industry perspective, having spent time in-house at a multinational metals and mining corporation.