The customs valuation rules allows importers to exclude buying commissions from the customs value provided certain conditions are met. Conversely, selling commissions may need to be added to the customs value highlighting the importance in determining the correct type of agency relationship and drafting appropriate supporting contracts.
Buying commissions are however subject to VAT, even where the agent provides his services to you from overseas. . HMRC issued an information paper (CIP (11)59) on 14 July updating its position on for imports. Up to 1 January 2010 the VAT on buying commissions was to be accounted for by making an adjustment to the import VAT value on the customs declaration and a failure to do this could have resulted in penalties, collection of underpaid VAT (which could subsequently be recovered) and interest. From 1 January 2010 this import VAT should be accounted for on your VAT return using the reverse charge mechanism.
If you are purchasing from an intermediary or through an agent then there may be ways to reduce your customs duty cost or risks of HMRC challenges to your valuation of goods. If you would like to explore this matter further then please call us.
"ITS have highlighted significant cost savingopportunities."
CW Winter, Financial Controller Special Metals Wiggin Ltd.
"ITSs experience and knowledge has ensured projectswere completed with a favorable result."
K R Maddison, Financial Controller Bard Limited
"Rob explains clearly, and gets on with people. He isvery constructive and pragmatic. His loyalty to thereds is admirable, if misguided. One of my favouriteScousers!"
Nick Mallett, Partner DHM Stallard
"ITS helped us to reach a successful conclusion when HMCustoms tried to reject our proposed changes by usingtechnicalities."
D. Suddens, Finance Manager Blanc Aero Industries UK Ltd
"ITSs broad knowledge of Customs has proved invaluable"
D. Widdowson, Director of Financial Accounting Croda Chemicals Europe Ltd
"I have worked with Rob on complicated HMRC issues. Aswell as direct assistance, Rob has provided excellenttraining for operational staff. I recommend ITS."
G. Mitchell, Senior Operations Manager EPSON
"Rob has provided customs advice on many occasions,always demonstrating deep knowledge of his subject tohelp the business mitigate its duty liabilities."
