Customs Valuation of Air Transport Costs

28 October 2011

JCCC CIP (11)(87) highlights a common mistake being made by importers that could lead to additional customs duty demands and penalties on airfreight imports.

Most imports (over 95%) use the purchase price of goods as the basis for customs valuation. The customs regulations prescribe various factors that must be added to this price in order to determine a legally acceptable customs value. The most common additions are Insurance and Freight to the EU to reach a CIF value. Annexe 25 of the Customs Implementing Regulation lists the percentage of air transport costs to be included in the freight calculation. This percentage aims to take account of the fact that some of these costs relate to transport taking place after the aircraft reaches EU Member State airspace.

The JCCC CIP paper is reminding importers that only the air transport costs are to be appropriated not the airway bill or other ancillary charges. Air transport costs should only include surcharges relating to the transport of the goods (as opposed to loading and handling charges at the airport of departure). Therefore the following should not be apportioned:

• Loading fees
• Terminal loading charges
• Inland freight to airport of departure

It is likely that HMRC’s next audit of your business will focus on how air-shipments are valued. As such, we recommend you asking your agents how the customs value is currently determined so that you can take remedial action (if necessary). Voluntary disclosures will ensure you are not subject to penalties.


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