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Accounting for buying commission in the customs value
When to exclude and include the buying commission in the customs value and account for import VAT if you’re an importer paying fees to your buying agent.
Buying commission is the term used for fees paid by you as an importer to your agent to represent you when buying imported goods.
Some of the tasks that agents will carry out are to:
- find suppliers
- tell the seller what you want
- collect samples
- inspect the goods
- buy the goods on your behalf
- arrange insurance, transport, storage and delivery of the goods
When to exclude the buying commission from the customs value
Payments made to your agent for buying commission can be excluded from the customs value. This could include if the payment is shown separately from the price actually paid or payable for the goods on the documentation that accompanies the entry to free circulation, for example on an invoice or a valuation declaration.
Evidence required to exclude the buying commission
HMRC may ask for evidence of the contractual and trading arrangements between you and the other parties involved in support of any claim to leave out the amount for buying commission from the customs value.
This may include the following:
- a copy of the contract between you and your buying agent
- a copy of the original seller’s invoice showing the price of the goods or, alternatively if this cannot be produced, a copy of the original seller’s contract of sale showing the price of the goods
- copies of purchase orders, correspondence or other documentation which clearly evidence a genuine buying agency arrangement
Requests to amend a customs declaration to exclude non-dutiable elements after the entry has been accepted, and the goods released into free circulation, will be considered on a case by case basis.
When to include the buying commission in the customs value
If you do not have any evidence or it’s unsatisfactory, HMRC may decide that no buying agency arrangements exist, and the payments you make to the agent should be included in the customs value.
Accounting for VAT on buying commission
Buying commission is considered to be a payment for services subject to the business to business rule on the place of supply of services, and VAT should be accounted for under the reverse charge procedure.