UK businesses undertaking international trade have been, understandably, focused on Brexit the past two years – making contingency preparations through unprecedented levels of uncertainty in the UK-EU supply chain. Even with new transitional simplified procedures and reduced tariffs, the impact on preparing, adapting software solutions in readiness and -where necessary - recruiting additional resources has been significant and is still not completely over with further staged controls to be introduced.
What should not be forgotten is the introduction of the new Customs Declaration Service (CDS), which will replace CHIEF after 25 years of service.and is being termed the new Single Customs Platform.
CDS has actually been with us for some time, one software company who have been a leading part of HMRC’s managed migration process to get pilot customers operational is Descartes Systems who were the first software house to submit declarations on CDS back in September 2018.
Since those early days the rollout and migration has been slow with focus within HMRC like a lot of the country on Brexit and the implementation of the Northern Ireland Protocol changing the scope and functionality required within CDS as well as introducing new systems such as GVMS and GB Safety & Security.
For those traders operating in Northern Ireland then CDS has already been mandatory, initially for goods moving from Great Britain and the small number of scenarios to Great Britain and then for movements to and from the Rest of the World since October 2021. Some of this may have been masked by the introduction of the Trader Support Service but the declarations that are submitted to Customs via TSS are on the CDS system.
However, HMRC are now back with a focus on CDS migration with Services on CHIEF being withdrawn in two stages:
After 30 September 2022 – traders will not be able to make import declarations on CHIEF.
After 30 November 2023 – traders will not be able to make export declarations on CHIEF.
From new data requirements and processes to the challenges associated with using new systems, the move to CDS is far from straightforward. Companies will need significant time to prepare themselves, staff and customers for the changes – from data education and awareness training to the creation of Master Data files, back-end integration and support with new real-time tariff information feeds.
For those that have already started then they have some advantage; for those that leave it to the last moment may find themselves struggling with new declarations and processes at a time when support resources will be stretched.
Martin Meacock, Director, Product Management at Descartes Systems UK shares Descartes’ experience of working with the CDS migrations and calls on companies to start CDS planning, familarisation and a LIVE start date today.
New Era of Declaration
The migration to CDS from the existing CHIEF should not be under estimated. Experience has shown that although those who regularly use CDS will quickly get up to speed there can be a steep learning curve. It is not unusual in those first few weeks to encounter a lot of questions and uncertainty as business becoming familiar.
Not only is there the changing data requirements but new methods of paying the import taxes through Cash Accounts or online via an immediate payment that needs to be understood and planned for. This particularly caught out business in Northern Ireland who had not understood they may have to be EU taxes in some cases and therefore did not offer any method of payment such as a deferment account to cover such payments. The way CDS operates is that unless a method of payment is declared then default is to wait for an online payment resulting in a large number of declarations going uncleared due to CDS waiting for payment to be made or for the declaration to be cancelled and submitted again claiming the possible preferential or remission claims applicable.
Another main change under CDS is a requirement to declare more information about the holders of certain authorisations or accounts, as well as providing related documents. For example, a company using a deferment account to pay customs taxes under CDS will require not only the six-digit account number; instead of a prefix letter previously required in CHIEF to justify whether it was the declarant’s or importer’s account, they now need the account owner details plus the account guarantee details, including references. Essentially, companies can be required to declare six pieces of data rather than the two required with CHIEF.
Changes have also been made to the Customs Procedure Codes and related documentary and information codes which has come as a surprise to those who assume the old codes would work in the same way. Although a temporary relaxation in Prohibition and Restriction documents waiver is welcome as well as the removal of the need to declare tax lines there are still changes that need to be understood; the more complex the declaration then the greater the degree of re-education will be required.
While this will initially demand some additional data sourcing, once achieved there is likely to be a degree of repetition of declaration data. This provides an opportunity to create a history that can be easily reused. There is also a chance to leverage improved electronic data exchange with partners direct into a declaration to reduce manual rekeying, further streamlining processes and minimising errors.
Traders also need to become more familiar with using the online HMRC CDS portal, whether it is to authorise software to be able to submit declarations, check Deferment or VAT statements, authorizing standing use of a deferment account to third parties or responding to enquiries from HMRC for declarations on hold a much greater use of the portal can be expected and maybe require organisations to give access to a wider number of users than previously.
If organisations are to be ready on time, they need to get started soon. The shift from CHIEF to CDS is a significant cultural change and while system providers have an essential role to play in enabling the migration, companies must quickly come to terms with the new data and process requirements.
Training and education are essential to ensure organisations understand the new processes and steps required. HMRC has provided documents, such as declaration completion guidance, while systems providers have created learning material, training videos and other downloadable guides. But it is also essential to recognise that CDS continues to be a work in progress with situations where the reality of CDS does not always meet the expectations of the customs completion guidance – ensuring that organisations have expertise and experience in the actual implications of both the system transition and the new customs declaration requirements is crucial and that can only come by time and experience.
The good news is that it is possible to start testing and training on CDS wither through the Trade Test Service or the Trader Dress Rehearsal and this has been invaluable in helping business get ready.
Given the sheer numbers of companies that must make the transition to CDS, the industry is going to be stretched. If companies don’t actively seek out migration support, education, and training soon, there is a good chance that they will not be able to access the limited resource available required to Minimise upheaval and to actively explore opportunities such as Master Data files and templating, as well as electronic data exchange with partners, to streamline the new declarations process.
Written by Martin Meacock
Director, Product Management