DDP and DAP are Incoterms 2020 rules splitting cost and risk between seller and buyer. Under DAP the seller delivers the goods to the named place and the buyer handles import clearance, duty and VAT. Under DDP the seller takes all of that on, including the formalities inside the United Kingdom.
What actually changes between DAP and DDP
Under both rules the seller arranges and pays for carriage to the destination and bears the risk of loss until the goods are placed at the buyer disposal. The difference sits at the border: under DAP the seller role ends before import clearance, while under DDP the seller is responsible for clearance and for all charges too. That is one line in a contract, but since Brexit it is an entirely different workload.
Why DDP tempts buyers and traps sellers
A British customer is happy to buy on duty-paid terms because the goods simply arrive with no formalities. The seller, though, then has to act as importer in a country where they are not established. That means a GB identification number, appointing a customs representative and, where goods are sold from stock already inside the United Kingdom, a UK VAT registration as well. We cover the detail in the EORI number and UK VAT registration. Without that groundwork, selling on these terms usually ends in a surprise at the first delivery.
Import VAT: the most commonly forgotten trap
Under DDP the seller pays UK import VAT, but only a business registered there can recover it, and only under its own rules. If the seller is not registered, the VAT becomes a cost that was often never priced in. That is the most frequent reason a duty-paid deal turns out less profitable than it looked at quotation stage. The mechanism for accounting for import VAT on a return is covered in postponed VAT accounting.
When DAP is simply the sensible choice
- The buyer is an established UK business with its own customs agent.
- Shipments are irregular, so building an import setup does not pay for itself.
- The goods need licences or certificates a local importer can obtain more easily.
- The seller does not want to carry the risk of a post-clearance customs audit.
Selling to consumers is a different picture, because the buyer cannot handle clearance. We set out that case in B2C versus B2B differences in clearance.
What the rule means for the carrier
For us the Incoterms rule is operational information: it tells us who the importer is, whose identification number goes on the declaration and who receives the import documents. Any gap between what the parties agreed and what the documents say stops the clearance. So when a job is booked we ask about the rule directly and get it confirmed in writing. The wider division of roles is covered in Incoterms 2020 and responsibility for customs, and the arithmetic of charges in who pays duty and VAT on imports from Poland to the UK.
How to write the rule so nobody argues later
The abbreviation alone is not enough. The contract should state the rule, the specific delivery place with an address, the version of the rules, and who is responsible for unloading and for any waiting time. On deliveries into warehouses and distribution centres it is also worth stating who books the delivery window. Without that detail, a dispute after a failed delivery comes down to interpretation, and interpretation costs time and money.
Returns and claims: what happens when goods come back
A trade term describes delivery in one direction, and in practice some goods come back: a quality claim, an ordering error, a consumer return. At that point it becomes clear a return is a separate customs transaction rather than a reversal of the first one. Somebody has to be the exporter on the British side, the identity of the goods has to be tied to the original shipment, and it has to be established whether the charges paid can be reclaimed. Under DDP the seller usually already has the setup to run that; under DAP it more often has to be built, or a local returns address used. We set out the mechanics in returns of goods from the UK to the EU and in e-commerce returns. It is worth writing the returns rules into the contract alongside the Incoterms rule, because they are the most common source of argument after a first selling season.
Sources
This is general information, not legal advice: confirm the terms in your contract. Unsure which rule suits your UK sales? Describe the transaction in our quote form and we will set out the transport consequences of each option.
