SPE14430 - Specific rules and processes relating to Outward Processing: rate of yield – Added Value calculation of duty
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In most cases, where the exported goods are liable to a positive rate of duty, using the Added Value method of calculation will provide maximum duty relief.
Under this method duty is charged on the costs of processing the exported goods and transporting the compensating products back to the UK. The duty rate applicable is the rate which applies to the processed products (formerly known as ‘compensating’ products). To apply this method you must:
- calculate the customs value of the imported products using one of the normal valuation methods
- deduct from this the value of the exported goods used in the manufacture of the compensating products, applying the agreed rate of yield as appropriate
- account for duty on the difference between the two values, at the rate which applies to the imported compensating products.
It may be appropriate to use the value added method where, prior to their entry to OP, the temporary export goods have been released to free circulation at a zero rate of duty and are not of UK origin. However, if there is evidence of abuse of the OP procedure, where the goods are imported into the UK solely for the purpose of obtaining benefit of OP when they are re-exported and re-imported, OP should not be used.
Example of ‘Added Value’ duty relief calculation
All the exported goods, woven woolen cloth, are used to produce one type of compensating product, men’s suits (liable to a 13% rate of Customs Duty) which are all re-imported into the UK at the same time. The value of the compensating product is based on the built-up method of valuation.
‘Added Value’ method of calculating duty.
Example of Customs value of processed products based on the built up value:
| Value of the exported cloth | £5,000.00 |
|---|---|
| Cost of process | £2,400.00 |
| Freight and insurance (from the processing country to the UK) | £484.62 |
| Total customs value of the suits | £7,884.62 |
| LESS: Value of exported cloth | £5,000.00 |
| ‘Added Value’ on which duty is due | £2,884.62 |
| Duty due at 13% | £375.00 |
Note - Northern Ireland (NI) Customs Authorisations will continue to fall within the provisions of the Union Customs Code (UCC), as retained by the European Union (Withdrawal) Act 2018 and CEMA 1979