Customs Value and DDP in the UK — 2 Mistakes That Most Often Wreck Your Margin

With DDP shipments to the UK, two mistakes come up exceptionally often: a company doesn't understand what actually goes into the customs value, and then assumes DDP "handles it" with no risk to the margin. In practice, this is exactly where it's easiest to end up with a gap between the commercial offer, the documents and the real cost of the operation.

This article sets out the topic at an operational level: what customs value means, where DDP complicates responsibility, and what to check before the pricing stops adding up.

Mistake 1: treating the customs value as just the invoice figure

Under HMRC's guidance, the customs value under the transaction value method isn't a single figure taken from the commercial document. The starting point is the price paid or payable for the goods, to which you add, among other things, the costs of transport and insurance up to the place where the goods enter the UK, loading and handling, packing, selling commissions and royalties that are a condition of sale. Transport and insurance costs after the goods have entered the UK are not included (gov.uk – Customs valuation, Method 1).

If a company relies solely on "the value in the quote", without checking the whole delivery model, it can end up misjudging the cost of importing on the UK side. There is also a second value: the basis for import VAT is the customs value plus duty and other charges payable on importation and incidental expenses (gov.uk – How to value goods for import VAT). Under DDP it works the other way round – the selling price already includes duty, but import duty is not part of the transaction value (reg. 115(1)(a) CIDEER, legislation.gov.uk), so it must not be included in the customs basis.

Higher-value consignments are discussed in how to import high-value goods.

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Mistake 2: using DDP without full control over the process

Under DDP, the exporter, or the party arranging the sale, takes on greater responsibility for seeing the shipment through to completion. The issue isn't just about the invoice or the customs duty itself, but also about who is responsible for the import clearance, what data is needed, and whether the commercial model has been costed properly. Importing into Great Britain requires a GB EORI number (how to get one), and the seller can recover import VAT only if it is VAT-registered in the UK – otherwise it becomes a cost. Postponed VAT accounting makes it easier to account for VAT on the return. For a comparison with DAP see DDP or DAP when exporting to the UK.

What to check before offering DDP

• whether you have the correct description of the goods and the right tariff code (how to find the HS code),
• whether the goods are of EU origin and you hold proof of origin, because that decides whether duty is 0% (UK–EU rules of origin),
• whether the commercial model genuinely places responsibility for the import on the UK side,
• whether the cost of delivery, clearance and further obligations has been calculated using correct data,
• whether the commercial documents and the operational plan are consistent with each other.

Why this kills margin

Usually it's not one big mistake, but several small assumptions that were never checked before the sale. An incorrect value, badly assigned responsibility and document verification done too late mean the margin disappears already at the transport stage. For clearance costs see How much does UK customs clearance cost.

Also see the video

This video complements the topic well from a commercial perspective and shows where, with DDP, it's easiest to lose control of cost and responsibility.

Official sources

• GOV.UK: Customs valuation - Method 1 - Transaction value
• GOV.UK: How to value goods for import VAT
• legislation.gov.uk: CIDEER, reg. 115

If you want to sort out your documents more broadly

For teams that want to work through the whole set of documents and data before exporting to the UK, this is also a good companion piece: PL-UK export documentation — a complete checklist.

Related guides

• DDP or DAP when exporting to the UK
• The commercial invoice for the UK — 8 mistakes
• Exporting to the UK — who's really responsible for clearance and documents
• Customs value of goods – how to calculate it step by step

Summary

If DDP is going to work without eating into your margin, the customs value and responsibility issues need to be settled before the sale and before shipping. If you'd like to work through this on a specific case, get in touch with us.

Frequently asked questions