What is Advanced Valuation Rulings | How can a business apply?
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Freya Jane
- Director of Customer's Success
The UK government has launched a new service called Advanced Valuation Rulings (AVRS) that enables businesses to obtain legally binding decisions from customs authorities on which valuation method to use when submitting a customs declaration.
This new service is part of the government’s plan to create a modern, digital customs service that makes it easier for businesses to import goods into the UK.
Understanding Advanced Valuation Ruling
Advanced Valuation Rulings are official decisions or interpretations about the import or export value of items rendered by tax or customs authorities. These decisions offer direction on how to assess a good’s value for customs purposes, particularly when traditional methods of valuation might not be applicable. They seek to provide clarity and consistency in assessing the value of items for taxation and customs duties, frequently dealing with complex or unique cases that necessitate particular assessment standards.
Methods of determining the customs value:
When importing goods into the UK, traders must determine the value of their goods to calculate the Customs Duty and import VAT. There are six methods for determining the customs value of an imported good, and it is the responsibility of the declarant to identify the correct valuation method for their shipment.
- The transaction value method.
- The transaction value of identical goods.
- The transaction value of similar goods.
- The deductive method
- The computed method
- The fall-back method
If a business is unsure of which valuation method to use or wants a legally backed decision on a particular method, it can apply for an AVRS ruling. It is not mandatory to apply for an advanced ruling, but it can reduce the administrative burden and provide certainty on the cost of importing goods.
According to HM Revenue and Customs (HMRC), which will administer the new service, it could take up to 90 days to issue a ruling once an application is submitted. Rulings will apply for three years unless they are withdrawn or cancelled.
Legal Binding Decision Services:
AVRS complements existing legally binding decision services such as Advance Tariff Rulings, Advance Origin Rulings, Binding Tariff Rulings, and Binding Origin Rulings. These services provide legal certainty on the correct commodity code, economic nationality, and commodity code for importing into the EU or Northern Ireland.
- Advance Tariff Rulings – these provide legal certainty on the correct commodity code, which can then be used to determine the correct duty and taxes.
- Advance Origin Rulings – these provide certainty on the economic nationality of goods when importing and exporting. For imports, this provides legal protection against any UK customs authority challenging the country of origin of the product. There are two types of origin: preferential (which feature in the UK’s trade agreements) and non-preferential.
- Binding Tariff Rulings – these provide legal certainty on the correct commodity code for importing into the EU or Northern Ireland.
- Binding Origin Rulings – these provide legal certainty on the economic nationality of goods when importing or exporting from Northern Ireland.
The launch of AVRS brings the UK in line with other countries, including some Free Trade Agreement partner countries, that already offer such a service. The new service will benefit hundreds of thousands of UK traders by stripping away uncertainty and reducing the administrative burden, according to Aidan Reilly, HMRC’s Director of Customs Policy and Strategy.
How is using Advanced Valuation Rulings beneficial for businesses?
Advanced Valuation Rulings (AVRs) have a number of benefits that can help businesses operate more efficiently and streamline import and export procedures.
Here are the key benefits:
Reduced risk and legal certainty
It makes legally binding decisions and ensures that your valuation method complies with customs regulations. This eliminates the risk of disputes during audits, giving you peace of mind when importing goods.
Cost savings
AVRs help businesses avoid overpaying duties by clarifying the correct valuation method upfront. For high-value or complex goods, this can translate into significant savings.
Streamlined operations
Businesses can simplify the customs declaration process by using a pre-approved valuation ruling. This speeds up the flow of goods through the supply chain by lowering administrative costs and minimising border delays.
Improved planning and budgeting
Knowing the exact customs value of your goods in advance allows for better financial planning. You can accurately forecast import costs, including duties and VAT, which helps maintain stable cash flow.
Competitive edge
Businesses that use AVRs demonstrate a proactive approach to compliance, which can enhance their reputation with trading partners and customers. It also positions them as reliable players in international trade.
Who can apply for an Advance Valuation Ruling
You can apply if you are:
- A trader using your own EORI number starting GB
- An agent acting on behalf of a trader with a business tax account (you will need to add the agent to the account as a team member first)
Important things to consider before requesting an AVR:
- Cost-benefit analysis: Compare the application fee and administrative load of an AVR with any potential cost savings and other advantages.
- Complexity of products: When it comes to complex or high-value goods, where valuation conflicts are more common, AVRs are usually more advantageous.
- Alternative solution availability: Take into account whether other techniques, including binding origin information (BOI), can offer comparable advantages.
Before you start the application
You must apply before you import your goods or make any import declarations, as decisions cannot be made retrospectively.
What you need
To apply, you will need the following:
- To identify the valuation method you think is best to value your goods
- A Government Gateway user ID and password (if you do not have one, you can create one when you apply)
- An EORI number starting with GB
When you apply, you will also need to give us supporting documents relevant to the goods being imported, such as:
- Commercial invoices from overseas suppliers
- Purchase orders
- Copies of previous import entries
- A breakdown of manufacturers’ costs
- Commercial agreements with suppliers
- Any other relevant documents
HMRC may refuse your application if you are not planning to import your goods or do not give them all the information they need.
Parts of your application may be made public — this may include attachments that are not marked as confidential. If you want information on your application to remain confidential, you must let HMRC know when attaching these documents.
The bottom line
Advanced Valuation Rulings are critical guides for firms negotiating the complexity of import/export value. Businesses can guarantee compliance and expedite procedures by formally requesting clarification from customs or tax authorities, particularly in situations when traditional assessment techniques are ineffective.
These decisions provide a transparent process for figuring out customs values, which helps businesses with their global trade activities while preserving regulatory compliance and valuation procedures’ stability. Preparation to optimise your import/export operations? Connect with iCustoms to experience our Advanced Valuation Ruling services and receive professional advice on it. Boost the accuracy of your customs valuation right now!
Reach out to the iCustoms team to enquire more at info@icustoms.ai
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