A customs agent acting as a direct representative makes declarations in the importer’s name, so the importer alone is normally liable for the duty and import VAT. An indirect representative declares in its own name on the importer’s behalf, so both are jointly and severally liable and HMRC can pursue either of them for the whole debt.
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What is the legal difference between direct and indirect representation?
Section 21 of the Taxation (Cross border Trade) Act 2018 lets a person (the principal) appoint a customs agent. The agent may make declarations in the principal’s name, acting as a direct agent, or in its own name, acting as an indirect agent. Section 21(3) says that anything done by an agent is treated as done by the principal and not by the agent. Section 21(4) and (5) carve out indirect agents: they are liable to import duty themselves under section 6(1), and the principal is also liable under section 6(3)(a).
HMRC’s guidance on customs debt liability records the choice on the declaration with a representation code: 2 for direct and 3 for indirect. If the representative does not state the type of representation, or is not empowered to act, it is treated as acting in its own name and on its own behalf, and so carries the debt itself.
The person who lodges the declaration is the declarant and, in HMRC’s words, the debtor. Representation decides whether that liability attaches to the principal, the agent or both.
Who is liable under direct representation?
HMRC’s position is that the principal is solely liable for the customs debt and solely responsible for record keeping and the accuracy of the declaration. The agent can become jointly and severally liable only where the principal gave clear instructions and the agent made a deliberate or unreasonable error.
The statute adds further cases where a direct agent is liable alongside the principal. Under section 21(6) that happens if the agent acts before its appointment has been disclosed to HMRC, after the appointment has been withdrawn, without authority, or where duty arises on goods declared for a procedure and the declaration was not made under the simplified declaration rules.
Sub agents need care. HMRC states that if the agreement between agent and principal does not allow delegation, a sub agent is not empowered to represent the principal directly, is treated as acting on its own behalf and is fully liable for any debt.
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What changes under indirect representation?
Agent and principal are jointly and severally liable for any customs duty or import VAT, and HMRC may seek payment from either. HMRC’s guidance describes the indirect agent as equally responsible for making sure the declaration is accurate. That is why brokers price indirect representation higher and often ask for deposits, credit checks or a guarantee.
If the agent also holds the authorisation for a special procedure that the goods are placed under, it is responsible for debts arising from the procedure not being discharged correctly or from goods being removed from customs control through its own actions. An indirect agent can appoint a sub agent to act for it directly, and that sub agent becomes jointly and severally liable if it makes a deliberate or unreasonable error.
When can you only use one type?
| Situation | Representation available |
|---|---|
| Importer not established in the UK, importing into Great Britain | Indirect only |
| Goods declared to inward processing, outward processing, temporary admission, authorised use or private customs warehousing | Indirect not allowed, so the authorisation holder uses a direct representative or declares itself |
| UK established importer bringing goods into Great Britain using the agent’s simplified declaration or entry in declarant’s records authorisation | Direct is allowed |
HMRC’s due diligence guidance tells agents to check whether a customer is UK established before acting directly, and confirms that for a business which is not UK established the agent can act only indirectly and will be jointly liable. This is the usual position for overseas online sellers shipping stock into UK warehouses.
What should the written agreement cover?
HMRC’s guidance says the agent cannot act without written instructions, and the instruction must show whether it acts directly or indirectly. HMRC asks for evidence of the authorisation only if it needs it, so the importer and the agent should each keep a copy. In practice the agreement should also cover:
- who pays duty, and whether the importer’s own duty deferment account or the agent’s is used (using another person’s deferment account needs that holder’s written authority to HMRC)
- how import VAT is accounted for, since HMRC tells agents to use postponed VAT accounting only if the trader instructs it
- which declarations the agent handles, including safety and security declarations
- whether sub agents may be used
- what information the importer must supply, such as its EORI number, invoices, contracts, goods descriptions and any licences
Appointing an agent does not hand over responsibility for getting the facts right. HMRC states that the importer remains responsible for due diligence on its declarations, and expects agents to carry out their own checks on customers, such as where the business is established, its accounts and its solvency.
How does HMRC collect a customs debt?
Where HMRC believes duty is owed it first sends a letter of the decision it intends to make, giving 30 days to respond under the right to be heard. The final decision is followed by a post clearance demand note, form C18. HMRC generally has 3 years from the date the debt arose, normally the date of the customs entry, to notify it, and for entries from 1 January 2021 this can be extended up to 20 years. Interest is charged on debts paid more than 10 days after the C18 is issued. Errors spotted after the event can be corrected by voluntary disclosure through the Customs Declaration Service.
A worked example
Illustration only. Two importers each use the same broker and each under declare duty by £5,000 because the wrong commodity code was used.
- Importer A is a UK company and appointed the broker as direct representative. It supplied the commodity code in its instructions and the broker entered it as given. Importer A alone receives the C18 for £5,000. The broker is not liable because it made no deliberate or unreasonable error.
- Importer B is a US seller with no UK establishment, so the broker acted indirectly. HMRC can issue the C18 to the broker, to Importer B or to both. If Importer B does not pay, the broker pays and must rely on its contract to recover the money.
The same error produces very different exposure for the broker, which is why the representation type should be agreed before the first shipment.
What are the common mistakes?
- Leaving the representation type blank, which treats the agent as acting in its own name and on its own behalf.
- Assuming a direct representative will absorb errors in the importer’s own data.
- Letting a broker subcontract to a sub agent without allowing for it in the agreement.
- Asking for indirect representation on goods entering inward processing or a private customs warehouse.
- Not reconciling the agent’s declarations with the business’s own records, which delays spotting errors and adds interest.
For the related reliefs and claims that agents commonly handle, see postponed VAT accounting, inward processing relief and rules of origin under the UK and EU trade agreement. Supply chain fraud warning signs in HMRC’s due diligence guidance overlap with the VAT principles in the Kittel principle and missing trader fraud.
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Related Accountapedia entries
- How customs warehousing works
- Customs special procedures explained
- Duty deferment accounts
- EORI numbers: who needs one
- Dropshipping: VAT for UK sellers
- Appeal routes for direct and indirect taxes compared
- Offshore employment intermediaries and UK NI
Sources
- legislation.gov.uk: Act 2018 c. 22, section 21
- GOV.UK: Customs debt liability
- GOV.UK: Check what you need to consider before getting someone to deal with cu
- GOV.UK: Appoint someone to deal with customs on your behalf
- GOV.UK: Due diligence when making customs declarations
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.