Transition to Customs Declaration Service (CDS) will affect all importers from 1 October.
What is Customs Declaration Service?
The Customs Declaration Service (CDS) will replace CHIEF as the system through which imports into the UK are declared from 1 October 2022.
Whilst the majority of businesses instruct third party freight forwarders and customs agents to process import declarations on their behalf, action is still required by businesses before 1 October 2022, including subscribing to CDS.
HM Revenue & Customs (HMRC) has been writing to businesses with a GB EORI number to alert them to the forthcoming changes, and the most recent communication from HMRC has clarified the steps traders need to take in readiness for the change.
We strongly recommend traders discuss the changes with their freight forwarder/customs agent to ensure they are ready for 1 October 2022.
For customs duty and import VAT payments, some businesses rely on their broker’s duty deferment account and the broker/forwarder will pay the necessary taxes at the time of importation, seeking reimbursement from the trader shortly afterwards. In these circumstances, there is perhaps very little for the trader to do with respect to CDS other than to subscribe to it. Businesses, that have applied Postponed Import VAT Accounting (PIVA) since 1 January 2021 and are paying the import VAT through their VAT returns, would already be subscribed to CDS as it is through that system that the PIVA statements required for VAT accounting purposes are available.
Customs Declaration Service – actions to take before 1 October
For importers not utilising a third party’s duty deferment account to make the initial payment of taxes, then there are actions to be taken now, in advance of 1 October 2022.
- Direct debit set up. Traders with an existing duty deferment account need to set up a new direct debit through CDS, as CDS uses a different HMRC bank account to CHIEF. The instruction must be in place by 1 October 2022.
- Set up the choice of customs duty and import VAT payment method (this does not include where a third party’s duty deferment account is being used). The payment methods available are:
- Cash account – each trader subscribing to CDS is automatically given a cash account, into which they can deposit funds to cover future import tax liabilities.
- Immediate payment – payment made at the time of importation.
- Individual guarantee – applicable to certain customs regimes and reliefs.
- General guarantee account – applicable to certain customs regimes and reliefs.
- Grant and maintain standing authorities to appointed forwarders/agents/brokers, to enable them to utilise a cash account or duty deferment account for payment purposes.
The above steps are completed through CDS. In addition to these, traders must also provide written instruction to their appointed forwarder/agent/broker, setting out their preferred payment method for duties and import VAT, plus the level of customs representation required, the incoterms that apply to the imports, the valuation method being used, and the circumstances under which goods are being imported (eg for resale). Such instruction should already be in place and is not a specific CDS-related requirement. However, the implementation of the CDS provides an opportunity for traders to ensure the appropriate written instructions with their third party agents are in place or to review and update existing ones where applicable.
How to subscribe to the Customs Declaration Service
Subscribing to CDS is a relatively straightforward process which starts here. The following information is needed to complete the process:
- Government gateway account details
- EORI number (which all importers should already have)
- UTR number (for UK taxpayers)
- Business address
- National Insurance number (for sole proprietors)
- The date the business started trading.
Functions which are to be performed through Customs Declaration Service
CDS services that become accessible following successful subscription include:
- Use of your own purchased customs software for CDS import and export declarations
- Ability to use a cash account for CDS declarations
- Access to postponed import VAT statements and import VAT and duty adjustment statements
- Ability to check how to pay duties and VAT on imports
- Ability set up a Direct Debit for a duty deferment account
- Ability to upload documents and get messages about customs declarations and manage your email address for CDS
It should be noted that non-resident companies who import into the UK under a GB EORI number should also subscribe to CDS and take the necessary actions as described, where applicable.
For assistance with CDS and other importation VAT and customs issues please contact one of our VAT experts.