Direct and Indirect Customs Representative – Differences and Liability for Customs Debt in the EU and UK

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Who is a customs representative?

A customs representative is a person (usually a customs agency) who carries out, on your behalf, the acts and formalities provided for in customs rules – submitting declarations, responding to the authority's requests, taking part in inspections. The general rules are set out in Article 18 of Regulation (EU) No 952/2013 (the Union Customs Code, UCC). A representative may be any person established in the EU who meets the conditions of the Member State in which they act. The choice of representation model is a strategic decision, because it determines financial liability.

What is direct representation?

With direct representation the representative acts in the name and on behalf of another person. In the declaration the principal appears as the declarant and the agency as their representative. Consequences:

• the customs debtor is in principle the principal,
• the agency is in principle not a customs debtor in this mode – in the EU it may become one, among other situations, where it provided information for the declaration that it knew, or ought reasonably to have known, was false (Article 77(3), third sentence, UCC),
• the principal must have an EORI number and – in the EU – be established in the EU (how to get an EORI).

What is indirect representation?

With indirect representation the representative acts in their own name but on behalf of another person. It is the agency that is the declarant and signs the declaration as a party. In this mode the representative must demonstrate compliance with the conditions imposed on declarants and have a guarantee where the procedure requires one (see customs guarantee). This model is chosen where the principal is not established in the EU or wants to make use of the agency's guarantee.

Who is liable for the customs debt – comparing the two models in the EU

Element	Direct representation	Indirect representation
In whose name	the principal's	its own (the agency's)
Declarant	the principal	the agency (representative)
Customs debtor (Article 77(3))	the declarant (principal)	the declarant and the person on whose behalf the declaration is made
Scope of liability	the principal	joint and several (Article 84 UCC)

Article 77(3) UCC provides that the debtor is the declarant and, in the case of indirect representation, also the person on whose behalf the declaration is made. Article 84 adds the principle of joint and several liability – the authority may recover the amount from any of the persons liable. For completeness: the internal relationship (who reimburses whom) is governed by the contract and civil law.

Is an indirect representative also liable for import VAT?

In its judgment of 12 May 2022 in Case C-714/20 (U.I.) the Court of Justice of the EU held that the mere status of declarant does not make an indirect representative jointly and severally liable for import VAT – such liability can only be introduced by an express and unambiguous national provision. The practical consequences therefore depend on national tax rules and the contract – which is why it is worth stating expressly in the agreement with the agency who accounts for VAT on a deferred basis and who bears the risk of its underpayment.

Why must a non-EU business use an indirect representative?

This follows from Article 170(2) UCC: the declarant must be established in the EU, and the exceptions in paragraph 3 include transit, temporary admission and declarations made occasionally. A business from outside the Union, for example a British one, therefore does not submit a declaration itself but through a representative who declares in their own name (indirect representation). In practice this is one of the more common grounds for appointing the agency as declarant in imports from the UK to the EU.

What is the position in the United Kingdom?

The HMRC guidance “Customs debt liability” (gov.uk) describes the rules on liability for customs debt in the UK:

• direct representative – only the principal is liable for the debt; the representative becomes jointly and severally liable where the principal gave clear instructions and the representative made a deliberate or unjustified error,
• indirect representative – both parties are jointly and severally liable.

According to HMRC guidance, a business not established in the UK that imports goods into Great Britain can only use indirect representation, and the agent must be established in the UK. If your business is established in Poland and sends goods to the UK, you therefore need to arrange a representative on the British side. For more on clearance in the UK: customs clearance from the UK.

What to look out for in the agreement with a customs agency

• the type of representation provided for each operation (direct or indirect),
• the scope of the power of attorney and its form,
• the rules for providing documents and data for the declaration – an error in data from the client is the most common source of disputes,
• settlement of duty, VAT and guarantee costs between the parties,
• the procedure for corrections and the response to requests from the authority.

Which model to choose – direct or indirect?

The choice depends on several factors. Direct representation works well where the principal is established in the EU, has their own EORI number and the necessary guarantee, or wants to keep liability for the customs debt on their own side. Indirect representation is a necessary solution for businesses from outside the EU and a convenient one for those who want to make use of the agency's guarantee. In return you must expect that the agency – as a co-debtor – will require settlements and may protect itself contractually, for example with advances or limits.

How to appoint a customs representative

A representative is appointed by granting a power of attorney that defines the scope of authority and the type of representation. The documentation should include:

• the power of attorney or contract, clearly stating the mode (direct or indirect),
• the identification details of the parties, including EORI numbers,
• instructions for specific clearances – in the UK, compliance with them determines the liability of a direct representative,
• correspondence confirming the data and documents provided for the declaration.

In the event of an inspection these documents make it possible to establish who submitted the declaration and on what basis, and who is responsible for any irregularities.

What happens when there is an error in the declaration?

If the error results from false data or documents provided by the principal, liability towards the authority lies with the declarant (in indirect representation – the agency together with the principal), and internal settlements follow from the contract. Where the error arose on the representative's side, for example through a departure from instructions, the principal may pursue claims against them under the contract. That is why it is worth documenting what was provided and when. In the event of an inspection or a decision to pay additional charges you should act quickly – the details of the proceedings depend on the circumstances, and a dispute over liability requires individual assessment.

Examples from UK–EU practice

A Polish business sells goods to a customer in Great Britain and wants an agency to handle the export clearance in the EU and the import clearance in the UK. On the EU side the business, as an exporter established in the Union, may appoint a direct or an indirect representative. On the UK side, since it is not established there, the import declaration will be made by an indirect representative, and the agency and the importer will be jointly and severally liable to HMRC. In the opposite situation – an import from the UK to Poland where the seller is a British business – it is the Polish buyer (the importer) or the agency acting on their behalf that is the declarant in the EU, and the British supplier cannot in principle declare goods on their own (exceptions under Article 170(3) UCC).

That is why, already when concluding the commercial contract, it is worth establishing who is the formal importer (importer of record) and how duty, VAT and clearance costs will be settled – often a single Incoterms clause can decide who becomes the declarant.

Sources

• Regulation (EU) No 952/2013 – Articles 18, 19, 77, 84, 170 (EUR-Lex)
• Regulation (EU) No 952/2013 – legislation.gov.uk
• Customs debt liability – gov.uk
• Customs duties – National Revenue Administration (podatki.gov.pl, in Polish)

Do you need a customs representative for UK–EU clearances? Contact us – a customs agency registered in CDS, UK EORI number.

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