Policy & Compliance
Dangerous goods Other areas where BIFA Members have encountered friction between regulation and contractual terms is the shipment of dangerous goods. The IMDG Code places considerable emphasis on the shipper’s responsibilities when shipping such products. BIFA has spoken to several suitably qualified professionals on this subject. The IMDG Code makes the shipper responsible for classifying the dangerous goods, ensuring proper UN-approved packaging, correct marking and labelling, and providing accurate shipping documentation. In response to a question as to who should be regarded as the shipper in an EXW contract, a dangerous goods professional noted: “My view is that the consignor (seller) is the one responsible for the DG documentation. Even if the shipment is Ex-works, the seller has a legal obligation to correctly declare the goods to a freight forwarder, so it should do the paperwork.” An alternative This particular Incoterm often conflicts with domestic law and international convention. As we have highlighted, EXW is often unsuitable for international shipments where UK export licensing, customs processes, or VAT zero-rating conflict with contractual obligations. In the commercial world, in many cases the EXW seller often provides assistance beyond its contractual obligations and to the point of acting as a FCA (free carrier) seller. Using this Incoterm still allows the buyer to manage the main carriage but enables the seller to be the exporter of record (paying for export formalities). Such a relatively simple change would better align commercial and regulatory obligations, allowing the EXW seller to more easily obtain and hold the necessary export evidence and avoid any VAT- related complications, etc. To conclude, the guidance in the Incoterms 2020 book states: “EXW may be suitable for domestic trades, where there is no intention at all to export the goods.”
of export from the UK. This scenario referred to as an Indirect Export is detailed in Section 6.6 of Notice 703. HMRC’s recommendation is that the seller protects itself against the possibility that the buyer will fail to provide the proper export evidence by, for example, “taking a deposit from your customer equal to the amount of VAT you will be liable to pay if the evidence is not sent to you”. Where Members have been reluctant to act in such circumstances, BIFA’s guidance is either to decline to process the export customs entry until a corrected invoice is obtained showing VAT at 20%, which is potentially the value that the buyer at destination will have to pay for the goods, or alternatively that the seller becomes the ‘exporter’ for customs entry purposes, appointing the customs agent as its direct representative, thus
allowing the former to obtain proof of export to substantiate the zero rating of the export sales invoice. Customs agent’s responsibilities It is important to recognise that customs representation is governed by customs legislation, whilst export control obligations and VAT liability are governed by different legislation. The seller of the goods is the party responsible for charging and accounting for VAT; therefore, an indirect customs agent will not be liable for any export VAT related irregularities. However, the latter may still find itself jointly responsible should there be valuation or classification issues for instance. Direct customs agents may still face penalties should they fail to follow the principal’s instructions or where a declaration is completed on the basis of assumptions rather than documented evidence.
“ EXW is often unsuitable for international shipments where UK export licensing, customs processes or VAT zero- rating conflict with contractual obligations
November 2025 | 23
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