Nicole Strickland, International Trade Officer, highlights the new Customs Declaration Service.
With Brexit on the horizon, there is another challenge ahead. With the number of processed customs documentations projected to increase from around 60 million to 300 million a year after the UK leaves the EU, HM Revenues and Customs (HMRC) are also replacing their current Customs Handling of Import and Export Freight system (CHIEF) with the new Customs Declaration Service (CDS). If your business imports or exports, this is what you’ll need to know about the new CDS.
Brexit could result in Britain leaving the customs union, subsequently leading to delays at the channel tunnel as increased barriers are put in place. Since the diminishing of EU custom barriers in 1992, there has been a surge in the number of freight trucks traversing through Kent. A lot of manufacturing businesses have adopted a just-in-time approach, with Honda UK as an example, relying on 350 trucks arriving from Europe daily to their UK factory, with only an hour’s worth of parts being held on the production line. Food importers and exporters could see their perishable goods wilt whilst they wait. It is estimated that for every 15-minute delay at customs, it may cost manufacturers up to £850,000 a year. It’s also vital to remember that a great deal of export from the UK is made up of imported goods. With CDS requiring more in-depth data, it’s important to develop an understanding of the system now to ensure that on top of these potential time-consuming barriers, there are no further delays.
For those of you who don’t know; CHIEF is a system currently used to process declarations when facilitating the international movement of goods. As the system is nearly 25 years old, it’s aging and is not able to adapt to new regulations as efficiently. Before the EU referendum took place, CHIEF was set to be replaced with CDS. However, with Brexit now coming into play, it’s putting pressure on the system to come around a lot quicker and handle a substantial increase in the volume of documents.
There are rising concerns over the fact that the new system is coming out just three months before Britain leaves the EU and customs union. With an additional 130,000 traders having to make customs declarations for the first time on what is essentially an untrialed system, it can potentially cause a lot of issues. Alongside these worries, it’s also the fact that companies are going to be required to input a lot more complex data and may also have to change their internal computer systems to use CDS, which even for large companies can be costly and take a long time to implement.
There is however a counter argument to the above. With the uncertainties of Brexit and its outcomes, there may be little to worry over as things might not be changing so imminently. There is a possibility that the UK agrees a post-Brexit transition of at least two years, which can give traders time to adjust to the new CDS system. Labour have also announced this week that they want to have full access to the single market with a new customs agreement. This again means that although traders may have to potentially input more data through the new CDS, at least there would be no increase in the number of documents.
The CHIEF system is currently used to:
- Process declarations for goods which are entering or leaving the UK or EU through ports and airports
- Calculate and pay the correct duty and taxes
- Electronically complete customs information
These things will still be processed through CDS. However, HMRC have announced recently that it will also allow traders to:
- Sign into CDS on GOV.UK through a Government Gateway account
- Have several new and existing services all in one place - for example, a company will be able to view their previous import and export data, check the tariffs, apply for new authorisations and simplifications, and check their duty deferment statement
- Access online help which will include self-service tools, guides and checklists
In addition to the above, they have advised some extra information will be required when declaring goods to align with the World Customs Organisation Kyoto Convention, which is currently being implemented in the UK through the Union Customs Code (UCC). These are:
- An audit trail of previous document IDs
- Additional party types, such as the buyer and seller
- Possible additional commercial references or tracking numbers
- Levelling – change between ‘Header’ and ‘Item’ for some data items
For UK customs data to be aligned with international standards, there will also be 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 and the number of items on a declaration – CDS will allow a maximum of 999 items of a declaration instead of 99 on the current CHIEF.
HMRC are beginning a phased launch of the new CDS in August this year, with the idea that it will completely replace CHIEF in the start of 2019.
Having spoken to one member, Simon Booth from DSV Air & Sea Limited has said that “Any new system will cause a certain amount of disruption to a business even if it’s just time taken re-educating and training staff in the new data set requirements etc. Our job as freight suppliers is to minimise any potential risk in the lead up to implementation by working closely with IT and our software suppliers to ensure our operational staff are trained and prepared and interact with our customers” He believes though that “The successful role out of CDS will ensure the UK has a system with the scale to handle any Brexit outcome with probably a few tweaks on the way”.
Do you have any worries around the new CDS? What is your business currently doing to get prepared? Email me at email@example.com to share your views or any queries on the new CDS.