How to use Incoterms

Explore the different responsibilities sellers and buyers can agree on for goods delivered to Northern Ireland.

Contents

Goods movements between Great Britain and Northern Ireland need declarations to HMRC.

Incoterms state who completes import declarations and who pays import duties when necessary. This applies to goods delivered in Northern Ireland as part of a sales contract.

The party responsible for the import declaration can complete it using the Trader Support Service portal.

Why do you need to know about Incoterms?

Incoterms are important because they make trading easier. This helps businesses move goods between Great Britain and Northern Ireland.

In every trade deal, the buyer and the seller must agree on who:

pays for delivery
handles the cargo and freight insurance during shipping
takes care of the documentation

Incoterms set a standard for trade terms between sellers and buyers. Global recognition of these terms supports contracts for the sale of goods. You can find further information about Incoterms (opens in new tab).

Who needs to know about Incoterms?

Incoterms are important across many parts of a business. When everyone understands them, they help keep work aligned in the following ways:

import teams use Incoterms to give the right instructions to carriers moving goods
sales teams include them on quotes to show the sale type and delivery terms
procurement will use a specific Incoterm in contracts to set clear responsibilities for costs and risks
accounting teams use them to decide whether to approve freight invoices linked to a purchase order
finance teams review the Incoterms on purchase orders to confirm the customs value calculation and identify extra costs in the ‘Landed Cost’ - this is the total cost of buying goods, including shipping them from the origin country to the selling country

How many Incoterms are there?

There are 11 Incoterms® 2020. They explain the responsibilities, risks and costs for buyers and sellers when delivering goods. You can identify them when completing declarations in the TSS Portal.

7 of these rules apply to all modes of transport. The other 4 apply to sea, land, or inland waterway transport.

You can find further information about Incoterms (opens in new tab).

Which Incoterms are often used for Roll on/Roll off (RoRo) movements from Great Britain to Northern Ireland?

If you’re buying or selling goods from Great Britain to Northern Ireland, these Incoterms are commonly used:

Ex Works (EXW)

Buyers in Northern Ireland arrange transport to the destination. They must complete import declarations and pay any applicable duties if the goods are ‘at risk. The risk of loss or damage moves from sellers to buyers at the agreed pick-up spot.

Delivered at Place (DAP)

Sellers in Great Britain arrange transport to the destination chosen by buyers in Northern Ireland. They also pay all costs, including freight and insurance, to the destination.

Northern Ireland buyers must complete import declarations and pay any applicable duties if the goods are 'at risk'.

The risk of loss or damage passes from sellers to buyers when the goods arrive and are ready to be unloaded at the agreed destination.

Delivered Duty Paid (DDP)

Sellers in Great Britain arrange transport to the destination. They must complete import declarations and pay any applicable duties if the goods are ‘at risk’.

The risk of loss or damage passes from sellers to buyers when the goods are ready to unload at the agreed place of destination.

Note: When using DDP, the declared invoice value includes duty. If applicable, each item line on the invoice must show:

customs duty (including any secured duties)
definitive anti-dumping duties
definitive countervailing duties
retaliatory duty

You can find more information about Working out the customs value of your imported goods (opens in new tab).

Can I still use Incoterms® 2010 after 1 January 2020?

Yes, all contracts with any Incoterms® 2010 are valid if all parties agree. In this scenario, export documents must clearly state the Incoterm version agreed.

The International Chamber of Commerce (ICC) suggests using Incoterms® 2020 starting 1 January 2020. However, parties in a sales contract can choose any Incoterm version after that date.

You need to specify the version of Incoterms that you are using, such as Incoterms® 2020, Incoterms® 2010, or an earlier version.

Negotiating Incoterms

When agreeing a sales contract, the sender and receiver must agree on which Incoterm to use. The best choice can depend on the size of the business and their freight management experience.

For example, a large company in Great Britain, selling to a smaller buyer in Northern Ireland, may have more shipping experience and access to cheaper transport. In this case, the parties might choose DDP where the seller manages delivery and completes all declarations.

If a large Northern Ireland company is buying from a small company in Great Britain, the parties may choose to use EXW. This means the buyer takes on more responsibility, risks and costs for moving the goods.

When two smaller businesses trade, it may be less clear who should take more responsibility. In this case, based on business capacity, both parties should agree which Incoterm best fits their needs.

Trader Support Service