VAT news


Businesses should prepare now for the August launch of HMRC’s Customs Declaration Service

carolineheath 4 May 2018 No comments

In August 2018 HMRC will begin a phased launch of the Customs Declaration Service (CDS).

UK businesses that currently import or export goods outside the EU will need to prepare now for using the new service to declare these goods, due to revised and additional data requirements.

Depending on the outcome of Brexit, UK businesses that currently only trade within the EU are also likely to be impacted and should make appropriate preparations to be able to make declarations in CDS.


Why CDS is replacing CHIEF

The CDS system will replace the current customs system known as CHIEF (Customs Handling of Import and Export Freight). CHIEF is almost 25 years old and its aging technology cannot easily be adapted to new requirements.

In 2013, following changes to EU legislation, HMRC started a programme to replace CHIEF. The new system will align with international trade standards, as set out in the World Customs Organisation (WCO) Kyoto Convention, which are currently being implemented in the UK through the Union Customs Code (UCC).


Impact of Brexit

The replacement programme was started before the UK voted to leave the EU in June 2016 and before the government committed to seeking a new customs arrangement with the EU from March 2019 (or post any agreed Brexit transition period).

Post-Brexit, all movements of goods to and from EU countries are likely to be treated as imports and exports, which is not the case for as long as the UK remains a member of the EU Customs Union.  HMRC have stated that CDS will, however, be scaled to handle any potential increases in the volume of declarations that may result from the UK’s exit from the EU.


New Requirements and Information on CDS

CDS functionality will continue to allow businesses to:

  • process declarations for goods entering and leaving the UK or EU through ports and airports.
  • calculate and pay the correct duty and taxes.
  • complete customs information electronically.

The key differences will be:

  • Access to CDS on GOV.UK using a Government Gateway account.
  • Availability to traders of new and existing services in one place (e.g. checking tariffs, viewing pre-defined reports of previous import and export data, applying for new authorisations and simplifications, and checking duty deferment statements).
  • Enhanced online help including self-service tools, guides and checklists.
  • Additional information requirements including:
    • an audit trail of previous document IDs.
    • additional party types, such as buyer and seller.
    • possible additional commercial references or tracking numbers.
    • levelling i.e. changes between ‘Header’ and ‘Item’ for some data items.
  • Alignment of UK customs data with international standards, resulting in changes to:
    • location of goods identification (based on UNLOCODE).
    • the warehouse type code list.
    • item tax lines, including method of payment codes.
    • unit of quantity codes (ISO).
    • the way customs procedures are quoted.
    • the number of items on a declaration (the current limit of 99 items will be increased to 999 on CDS).


Business Preparation and Transition Instructions

Importers, exporters or their agents will be given instructions by their software provider once the provider is ready for them to start making declarations on CDS. CHIEF will continue to operate between August 2018 and early 2019 to aid the transition. From early 2019 all declarations will need to be made on CDS.

To keep informed on CDS and any transition preparation that may need to be carried out, businesses are advised to register now for the HMRC Business Help and Education email service, under the education topic ‘Trading with other countries’.

Regular CDS updates can also be accessed on GOV.UK and through trade associations.

Given the short timescale until its launch, it is recommended that businesses currently using the CHIEF system monitor developments in HMRC’s implementation of CDS to ensure they are adequately prepared to meet the new requirements.

The introduction of CDS will also have major implications for those businesses that currently only trade with other EU Member States, and who therefore may find themselves in the position of having to make import and export declarations for the first time post-Brexit.

Please get in touch with us if you require any further information or assistance ahead of HMRC’s move to the CDS system.