Why is my customs exchange rate different?
Customs conversion values the import, bookkeeping records the transaction, and your payment rate determines the sterling cash spent. Different dates and methods can produce different amounts without an error. Keep separate workings and reconcile them with help from Cambridge China Bridge.
Separate the purposes before comparing rates
A customs sterling value, a purchase ledger entry and a bank debit answer different questions. Label each calculation with its purpose, foreign currency amount, relevant date, rate source and sterling result. A difference alone does not establish that the declaration is wrong.
Our guide to customs value covers what belongs in the valuation. This guide adds the reconciliation between that valuation, your accounts and the money actually paid.
| Conversion | Purpose | Evidence to compare |
|---|---|---|
| Customs | Sterling valuation for the import | Declaration and broker's valuation workings |
| Bookkeeping | Recorded purchase and supplier balance | Purchase ledger and accounting rate source |
| Payment | Sterling cash spent settling the supplier | Bank debit, transfer confirmation and separate fees |
Check the customs acceptance date and contract
For an ordinary foreign currency purchase without an applicable contractual fixed rate, HMRC requires its published rate applicable when the declaration to free circulation is accepted. Paying a deposit earlier does not let you substitute the settlement rate. Ask your broker for the acceptance date and the published rate actually used.
A fixed exchange rate forming part of the sale contract can change the treatment. Where the supplier requires foreign currency payment but invoices in sterling at a contractual fixed rate, HMRC says to convert back to foreign currency, then reconvert at the customs acceptance-date rate. Give the broker the contract and settlement currency, rather than just the invoice. Use our HMRC exchange rate converter alongside those checks.
Keep the accounting calculation separate
HMRC's accounting guidance describes translating a purchase at the transaction-date exchange rate. Ask your accountant to identify the recognition date and rate source for your accounting framework, particularly where deposits precede delivery. Do not automatically copy the customs rate into the purchase ledger. Our guide to foreign currency supplier invoices covers the accounting detail.
HMRC also describes translating unpaid foreign currency trade creditors at the closing rate at the balance sheet date. An unpaid supplier balance can therefore have a different sterling carrying amount from the original purchase entry. Ask your accountant to reconcile the recorded balance, settlement and any exchange difference.
Calculate the sterling cash actually spent
For payments converted directly from sterling, add the actual sterling debits for the deposit and balance, then add separately charged transfer fees without counting them twice. Match each transfer to the foreign currency amount credited against the supplier invoice. Payments made on different dates may have different rates.
If you paid from an existing foreign currency balance, the transfer itself does not reveal when or at what sterling cost that currency was bought. Keep the currency purchase records and ask your accountant how to allocate that cost. For buying decisions, compare the total cash outflow and the supplier's net receipt, rather than the advertised exchange rate alone.
Reconcile the shipment without forcing a match
Build a reconciliation for each shipment showing the invoice currency and amount, deposit and balance payments, customs valuation adjustments, customs conversion, ledger conversion and payment fees. Compare like amounts before blaming the rate: a customs value containing freight or other additions will not match a goods-only invoice. Keep the landed price calculation alongside this reconciliation.
Investigate an unexplained difference in currency, amount, acceptance date, rate direction or contract terms. Send customs questions to the broker and ledger questions to the accountant. Cambridge China Bridge's staff in China can help obtain the supplier invoice, agreed payment terms and payment acknowledgements needed to resolve the supplier side.
Frequently asked questions
Can I use my bank exchange rate for customs?
For an ordinary foreign currency purchase without an applicable contractual fixed rate, use HMRC's rate at customs acceptance. A bank's payment rate does not replace it.
Does paying a deposit fix the customs rate?
No. HMRC says prepayment uses the official rate at entry to free circulation, rather than the settlement rate. Give your broker any contractual fixed-rate terms to check separately.
Should my purchase ledger match the customs value?
Do not force a match. Accounting and customs can use different dates and valuation bases. Reconcile the invoice amount, valuation additions and conversion workings.
How do I work out my actual sterling payment cost?
Add the sterling debits for all supplier payments and separately charged fees, avoiding double counting. If you used existing foreign currency, also trace its purchase records.