The UK government announced on 15 March 2023 that customs valuation rulings, so-called Advance Valuation Rulings (“AVR”), would soon be a feature of the UK Customs regime (please see our earlier blog here). On 27 April 2023, the UK government published guidance on submitting applications for an AVR with the system going live. This is despite the necessary legislative amendments not yet coming into force.
An AVR is a legally binding ruling held by the legal entity that applied for the AVR on the customs valuation methodology of specified goods in a particular scenario, valid for a period of three years (subject to cancellation or withdrawal). In line with the WTO Customs Valuation Rules, the customs valuation methods are to be applied sequentially in the UK. Government guidance specifies that the Customs authority, HM Revenue & Customs (HMRC), may ask a trader to justify why an earlier method was not used if using any of the Methods 2 to 6. An AVR can therefore provide confidence that a particular customs valuation methodology–especially the lesser used valuation methods such as Method 4 (known as the deductive method), Method 5 (known as the computed value method) or Method 6, (known as the fall-back method)–will not be challenged given the primacy of Method 1 (known as the transaction value method).
- Each type of goods that require a decision will require a separate application.
- Applications should include supporting documents relevant to the goods being imported and for the customs methodology identified.
- Applications must be submitted online, either via the business tax account of the trader with a GB EORI or by using a Government Gateway user ID if the trader does not have a business tax account.
HMRC advises that parts of the application may be made public —including attachments that are not marked as confidential. HMRC will confirm receipt of an AVR application within 30 days of receipt, and provide a decision on the AVR within 90 days of an application being accepted.
An AVR decision will include:
- the start date of the ruling (valid for up to 3 years)
- a unique reference number that identifies the goods which must be quoted on the customs declaration
- the name and address of the legal entity that holds the ruling — (decisions are non-transferable)
- a detailed description of goods (including any specific marks and numbers) which can be used to easily identify the goods at the border
- an explanation of how HMRC reached the decision
An AVR can be appealed via a review by writing to the Advance Valuation Ruling Team (known as an HMRC review) or directly to the tribunal service (independent of HMRC). The outcome of an HMRC review can be appealed to the tribunal.
The introduction of the AVR system does not impact the ability of an importer to apply for an authorisation for a simplification under Chapter 2 part 109 of The Customs (Import Duty) (EU Exit) Regulations 2018 (“CIDEER”) to use Method 1 where certain values required to be added for the goods, such as assists, cannot be determined at the time of import. A valuation simplification could be based on a percentage addition or deduction or average values. A simplification authorisation is not available for retrospective price adjustments. Similar to the simplification available under Article 73 of the Union Customs Code in the EU, the authorisation under part 109 of CIDEER in the UK is only available for customs valuations under Method 1. An application for an authorisation to use a simplification can be made directly via email to HMRC’s Valuation Unit of Expertise–unless the trader qualifies as a “Large Business” trader, in which case, the application should be submitted to the Customer Compliance Manager (CCM). The application should detail why a simplification procedure is necessary along with the methodology to calculate the amounts.
If you would like more information on customs valuation for imports into the UK or on applying for a customs valuation simplification or an AVR, please get in touch with a member of our team.