HMRC has released new guidelines for businesses outlining the key steps for switching to the Customs Declaration Service (CDS).

The CDS will permanently replace the Customs Handling of Import and Export Freight (CHIEF). The CDS is a more modern IT platform in line with the United Kingdom government’s ambitious expectation of establishing the most efficient customs system in the world by year 2025.

Many companies with a UK VAT identification number are already benefiting from the new CDS system by taking advantage of Postponed VAT Accounting (PVA). This system lets them avoiding the payment of import VAT when goods are imported into the UK through a reverse charge mechanism in their periodical UK VAT return.

Please be aware that for non-established business – for instance, EU Amazon merchants – postponed VAT accounting is accessible only if their customs agent acts as a direct representative, meaning that he accepts to be jointly and severally liable for any VAT liability of the EU merchants. Not many customs agents are available to accept the risk. That is why so many non-UK businesses are struggling to access PVA, even when they hold a UK VAT + EORI number. Sometimes, shippers use their own VAT number to clear in the UK goods of their business clients under postponed VAT accounting: this is wrong and creates risks for both the shipper and the concerned merchant.  

The shutdown of the CHIEF system is going to be applied in two stages:

• From 30 September 2022 the option of making import declarations will cease.
• From 31 March 2023, the option of making export declarations will cease.

With effect from 1 April 2023, the CHIEF system is going to be permanently closed and so all companies will adapt to the new CDS system.

Register for a Government Gateway account

The majority of businesses will certainly already have a Government Gateway account to access their personal or corporate tax account. Businesses will be able to make customs declarations through this account. If a corporation does not possess an account, it can register online.

Request for registration and identification number of the economic operator

All companies wishing to import goods into the United Kingdom or export goods out of the United Kingdom must have an EORI number. If an organization doesn’t have such EORI number, it can apply for it online. The EORI is usually released within minutes.

Register to the CDS 

Companies will have to register for the customs declaration service and must be in possession of the below information:

• Government Gateway user ID and password
• GB EORI number
• 10-digit Unique Tax Reference Number (UTR) (for UK companies)
• business address held by HMRC in its customs records
• date of commencement of business

Choose the payment method to be used.

Users can select the preferred payment method for the declaration and can check balances and payments in the customs declaration service’s financial dashboard.

The payment methods are:

• duty deferral account: the customs declaration service uses a separate HMRC bank account for CHIEF; therefore, another direct debit will have to be set up.
• Postponed VAT accounting.
• Cash account.
• immediate payment via Bacs, CHAPS, online or via telephone banking: payment can be made by debit, corporate credit card or cheque.
• individual guarantee: can be used to cover customs duties for one-off or high-value imports.
• general guarantee account: this allows to provide multiple guarantees from one account and thus continue to import goods into the UK and pay a disputed amount later once agreed.

Instruct your broker or customs agent

Provide customs clearance instructions to the customs agent.