Legality of Declared value for temporary Exports

Question posted by Antony Stanbridge, on behalf of Livingston Ltd in TW11

95% of our business is rental (temporary export 1-24 months).
Our sales team/customers are putting a lot of pressure on using a declared value which is not "fair market value of the goods" and they are arguing that the customer is not buying and that all the declared value should reflect that of the rental charges being applied (which could be 15% of the price you'd pay to buy the goods). When selling the goods, it seems clear what values to use as the declared value (the price you're selling goods for )..for rental?...My own knowledge of exports says that I should use a value that reflects the market value of goods....but is there a legal alternative?

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Mike Josypenko, on behalf of The Institute of Export in PE2.

An interesting question: I presume that this issue is prompted by the issue of what customs duty your client is paying when they import the rented equipment into their country? There is a basic difference between the value of a product, and the transaction price which a client might pay for the rental of a piece of equipment. Customs duties tend to be based mainly on the value of a product, and a Customs office might argue that allowing goods to be imported based on use of a lower "rental value" might be used by some unscrupulous traders as a "back door" way of reducing customs duty for importing the goods on a permanent basis.

I am not aware of any HMRC rules governing declaration values for exports of rented or leased goods, but they do touch on this subject in relation to imported goods in HMRC notice 252 (Valuation of imported goods for customs purposes). Section 15 describes a valuation process based on multiplying the rental value by the expected commercial life of the rental product. I would imagine that each country you send goods to may have their own rules on valuations - if you want to comply properly you would need to check each country's regulations indiviudally, directly or using a friendly forwarder or customs broker. However I suspect that this will not stop the requests from your sales people.

If customs duty is the issue, the best way of dealing with this may be through greater use of temporary import procedure wherever possible in your buyers' countries?

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HMRC Advisor, on behalf of HM Revenue & Customs in G67.

Information on the Customs requirements for declaring the value of goods for export can be found in Volume 3 part 1 of the Customs Tariff states:

Box 46 – Stats value
The value to be declared is the cost of the goods to the purchaser
abroad (or, if there is no sale, the price the goods would fetch if
sold to a purchaser abroad), It should include packing, inland and
coastal transport in the UK, dock dues, loading charges and all
other costs, profits, charges and expenses (e.g. insurance and
commission) accrued up to the point where the goods are
deposited on board the exporting vessel or aircraft. Outward sea/
air freight and marine/air insurance should be excluded; and any
cash or trade discounts to the purchaser abroad should be
deducted.

Further Information on the Customs requirements for exporting is given in HMRC Public Notice 275. All notices can be found on our website www.hmrc.gov.uk under Quick Links > Library > Official Statistics – Publications – Notices, Info Sheets & Other Reference Materials > Import, Export & International Trade. The Public Notices are in numerical order.

HM Revenue & Customs
Customs International Trade & Excise
www.hmrc.gov.uk/contactus

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