As part of the move towards a modern digital customs system, HMRC launched a new online service at the end of April that allows importers to apply for Advance Valuation Rulings (AVRs).
This will help importers to be certain that the customs valuation method they’re using is legally correct, making the process easier for those importing goods into the UK.
Here’s how the new Advance Valuation Ruling Service (AVRS) works, and how it could help you if your business regularly imports goods into the UK.
What is the Advance Valuation Ruling Service (AVRS)?
When traders import goods, they must calculate their value in order to calculate the customs duties and VAT they will owe. There are six different methods for working out the customs value of imported goods, and it’s the trader’s responsibility to identify the correct method.
If the trader is uncertain about which method is the right one for their shipment and concerned about paying incorrect customs tax, they can apply for an Advance Valuation Ruling (AVR).
The UK customs authorities will determine whether the trader’s chosen method is correct and provide a legally binding decision on how the trader should calculate the customs value of their goods. This will give the trader confidence in completing customs declarations.
Previously, the UK only offered legally binding decisions for Advance Tariff Rulings, Advance Origin Rulings, Binding Tariff Rulings, and Binding Origin Rulings.
The introduction of the Advance Valuation Ruling Service (AVRS), announced in the March 2023 Spring Budget, is designed to bring the UK in line with services provided by other customs authorities around the world and enable access to international trade agreements.
Using the AVRS, traders can apply for an AVR online, and HMRC will confirm within 90 days whether the method they’re using to calculate the customs value of their imports is appropriate.
The legally binding decision will last for 3 years, so the trader can use this information to work out costs ahead of shipments, with peace of mind that they’re completing the paperwork properly.
Who can benefit from the AVRS?
Any business responsible for importing goods to the UK, or any agent responsible for making customs declarations on their behalf, can use the AVRS.
HMRC estimates that the new service could impact around 252,000 businesses in the UK, including importers themselves and agents who act on behalf of traders.
The AVRS is expected to have a positive impact on those who use it, because AVRs will simplify the customs valuation process and reduce required resources for importers.
This should also improve relationships between businesses and HMRC, as traders will have legally backed confirmation that their customs methodology is correct.
The Director of Customs Policy and Strategy at HMRC, Aidan Reilly, stated that the AVRS will make it easier for traders to manage customs, reducing their administrative burden and helping them to budget more effectively for import costs.
How to make an AVRS application
You cannot request an AVR retrospectively, so you must apply before your goods are imported and before you make any customs declarations. To use the AVRS, you will need:
- ● The customs valuation method you think is appropriate for your goods
- ● Your Government Gateway ID and password (created when you sign up)
- ● An EORI (Economic Operators Registration and Identification) number starting with GB
You must also provide supporting documents to identify the goods being imported and their value, such as invoices or commercial agreements from suppliers, purchase orders, breakdowns of manufacturer costs, or copies of previous import documents.
You can either apply for an AVR through your business tax account if you have one, or through your Government Gateway account if you don’t.
HMRC will confirm receipt of your application within 30 days, and award an AVR decision within 90 days. This decision will include a unique reference number to identify your goods, the name and address of the holder of the ruling with the legal right to use it, and the period of validity.
Managing imports into the UK
Valuing goods by yourself can be complicated and time-consuming, which is why many traders choose to appoint customs agents or parcel operators to manage this on their behalf.
You can still import goods into the UK without an AVR – using the new system is not mandatory – but it will definitely make things simpler when ensuring you pay the correct duties.
Another way to help you stay on top of import duties is to use a bonded warehouse. This temporary customs suspension zone allows you to defer import tax while your imported goods are in storage, with duties only becoming payable once your goods enter the UK market.
Not only do we run a HMRC-approved bonded warehouse located conveniently close to major transport links in North West England, but we can also provide a range of logistics solutions to streamline administration and distribution.