Which exchange rate should I use for UK customs?
Normally, use the HMRC rate applicable when your declaration to free circulation is accepted, unless a qualifying contractual fixed rate applies. Keep that customs calculation alongside the actual supplier payments and your purchase ledger, explaining the differences separately. Discuss supplier document checks with Cambridge China Bridge.
Choose the rate by its purpose
For customs, normally use the HMRC exchange rate applicable when the declaration to free circulation is accepted. Paying the supplier earlier does not make the payment-date rate the customs rate. Ask your customs agent to identify the acceptance date and rate used, and save the supporting calculation.
A qualifying fixed exchange rate under the sale contract can change the treatment. Send the agent the contract and settlement currency before clearance. A rate arranged separately with your bank is no reason to assume the contractual exception applies. Use our customs value guide for what belongs in the valuation.
Keep linked records with separate purposes
Create a reconciliation sheet using the purchase order, invoice and shipment references. Keep the original currency amount visible throughout. Record the purchase-ledger sterling amount and its conversion basis, each payment's actual sterling cost, and the sterling customs valuation in separate fields.
Ask your accountant to confirm the accounting treatment for invoices, deposits and exchange differences. The customs calculation is supporting evidence for the declaration; it is not a substitute for deciding how to post the purchase.
| Record | What to capture | What to match |
|---|---|---|
| Supplier invoice | Original amount, currency, invoice reference and ledger conversion basis | Purchase order and supplier account |
| Supplier payments | Payment dates, foreign currency settled, sterling debits and identifiable charges | Invoice allocation and bank evidence |
| Customs valuation | Acceptance date, applicable rate, valuation adjustments and declared sterling value | Declaration and agent's workings |
| Reconciliation | Exchange differences, charges, scope differences and unresolved items | Accountant's posting instructions and supporting documents |
Reconcile payments before comparing sterling totals
Allocate the deposit and balance to the supplier invoice in its original currency. Check whether the foreign currency payments settle that invoice, allowing for documented credits or unpaid balances. Keep identifiable transfer charges separate so they do not look like missing supplier payments.
Then compare the sterling settlement amounts with the amounts allocated in the purchase ledger. Ask your accountant to confirm any exchange-difference posting. If a payment covers several invoices, document the allocation rather than assigning the whole bank debit to the shipment being cleared.
Explain the customs difference without double counting
Compare the same foreign currency goods amount converted at the customs rate with its recorded sterling payment cost. Label that difference as a comparison for reconciliation. It is not automatically the exchange gain or loss to post in the accounts, which depends on the ledger amounts and accounting treatment.
Next explain differences in scope, such as freight or tooling included in customs value but recorded elsewhere in your purchases. Keep duty, import VAT and bank charges identifiable. Do not add the difference between customs value and supplier payment as another landed-cost charge. Our landed price guide explains the wider cost build-up.
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Resolve discrepancies and keep the trail
A difference explained by conversion rates does not itself show that the declaration is wrong. Investigate an unexplained currency, invoice amount, acceptance date or valuation adjustment with your agent. Keep the original declaration and the explanation together; use our declaration checking guide when an error is suspected.
File the contract, invoice, payment evidence, ledger allocation and customs workings under the same shipment reference. Cambridge China Bridge's staff in China can help coordinate supplier document checks. Confirm the ledger postings with your accountant and the customs calculation with your customs agent.
Frequently asked questions
Can I use my bank exchange rate for UK customs?
Normally, use the applicable HMRC rate when the declaration to free circulation is accepted. Ask your agent whether a qualifying contractual fixed rate applies.
Which customs rate applies if I paid before shipment?
Prepayment does not move the customs conversion to the settlement date. Use the official rate applicable at entry to free circulation, subject to the contractual fixed-rate treatment.
Should my customs value equal my supplier payment?
The sterling totals can differ because of exchange rates and valuation adjustments. Compare the same goods amount first, then explain freight, tooling and other scope differences separately.
Do I book the customs exchange difference as a loss?
Do not post the customs-versus-payment difference automatically. Ask your accountant to reconcile settlement against the purchase ledger and confirm the exchange-difference treatment.