Before the Handshake: A UK Exporter's Agent Vetting File for New Europe

A first order in the Western Balkans, Moldova or Ukraine often arrives through a local agent. The agent knows the buyers, speaks the language and can make a UK supplier look credible in a market where personal relationships still carry weight. That is the commercial case. The compliance case is less comfortable: an agent who is paid to open doors can also create liabilities that sit on the UK exporter's books long after the first shipment has left Felixstowe.

The risk is not that agents are inherently problematic. It is that the relationship is often documented after the fact, in a short mandate letter and a commission invoice. When a tax authority asks why payments went to a particular account, or a compliance reviewer asks who introduced a public-sector customer, the file is thin. The answer is to treat agent vetting as a pre-contract exercise, not a post-order tidy-up.

Start with ownership, not the sales pitch

Before discussing commission rates, establish who the agent actually is. Obtain the local company registry extract, the ownership chart and the identity of the ultimate beneficial owners. Check directors, registered address, filing history and any previous names. Where the local register is incomplete, ask for constitutional documents and a signed ownership declaration. Record the source and date of every check.

Run sanctions and adverse-media screens on the company, its owners and the individuals who will handle the account. Screen for politically exposed persons, including family members and close associates. This matters most where the agent's pipeline includes state-owned buyers, municipal contracts or EU-financed tenders. A PEP connection is not automatically disqualifying, but it must be understood, approved and documented.

Ask whether the agent acts for competitors, distributors or suppliers in the same product category. Ask how the agent is paid by other principals. A representative who is also a distributor can have an incentive to favour its own stock. A representative with no verifiable office or staff may be a broker rather than an agent. Neither model is wrong, but the contract and the commission basis should reflect the reality.

Define the mandate before drafting the commission clause

Commission disputes usually begin with an undefined sale. The agreement should state the territory, product scope, customer segment and whether the appointment is exclusive. If exclusivity is granted, attach performance conditions and a review date. Open-ended exclusivity gives the agent leverage before the UK exporter has tested the market.

Set out the agent's authority. Can it quote prices, agree discounts, bind the exporter to delivery dates or sign contracts? If the answer is no, say so expressly. If the answer is yes, define the limits in writing. Uncontrolled pricing authority is a commercial risk, but it also creates tax risk: a dependent agent that habitually concludes contracts may give the principal a permanent establishment in the agent's country.

Define when commission is earned. Is it on order, invoice, payment, delivery or customer acceptance? State how renewals, repeat orders and spare parts are treated. Address split commissions where more than one agent is involved. Include clawback for unpaid invoices, cancelled orders and commission paid on transactions that are later reversed. Require the agent to register customers and opportunities in a shared format so that the link between introduction and sale can be evidenced.

Make termination and handover boringly clear

Agency termination is where local law can surprise UK exporters. Some jurisdictions provide compensation or indemnity to commercial agents on termination, even where the contract is silent. Take local legal advice before signing, not after a dispute begins. The agreement should set notice periods, post-termination commission tails, handover obligations and the return of samples, marketing materials and customer data.

Include immediate termination rights for bribery, sanctions breaches, fraud, insolvency and unexplained changes in ownership or beneficial ownership. A change-of-control clause is not administrative clutter. It allows the exporter to exit if the agent is acquired by a party that would not have passed the original due diligence.

Route payments through the contracting party

Commission should be paid to a bank account in the name of the contracting agent. Third-party payment requests, accounts in another jurisdiction or instructions that change shortly before a payment run are red flags. Verify bank details through a call-back to a known contact, not by replying to the email that requested the change. Keep the verification record with the payment file.

Address tax treatment in the contract and in the finance file. Confirm whether local withholding tax applies, who bears it and how gross-up or net-payment language operates. Obtain the agent's tax residence certificate and VAT registration where relevant. Do not assume that a UK payment has no local consequences. The agent's tax status, the location of services and the existence of a dependent agent can all affect the position. Local tax advice is cheaper than a retrospective assessment.

Build audit rights into the relationship

The contract should include anti-bribery and anti-corruption undertakings, a gifts and hospitality register, subcontractor approval and a right to audit the agent's books and records as they relate to the exporter's business. Include a right to suspend payments while an allegation is investigated. Require the agent to cooperate with sanctions and export-control checks.

These clauses are only useful if they are used. Keep a short due diligence memo that records the checks performed, the risks identified and the approvals given. Refresh the file annually or when ownership, senior personnel or the agent's customer base changes. For UK exporters, this file is part of the evidence of adequate procedures under the Bribery Act 2010 and of reasonable prevention in the wider corporate criminal liability context.

The file that survives review

A defensible agent relationship rests on a simple set of documents: registry extracts, ownership and PEP declarations, sanctions screens, a due diligence memo, a signed agreement with clear authority and commission terms, bank verification records, tax residence evidence and annual reviews. None of this guarantees a successful first order. It does mean that when the tax inspector or compliance reviewer asks why the agent was appointed, who approved the relationship and how the money moved, the answer is already on file.