Customs Declaration Service (CDS): What it Means for You and Your Business

What is the Customs Declaration Service (CDS)?

Every time goods cross the UK border, a wide variety of data about the item and circumstances of the movement must normally be declared to HMRC.

For several decades these customs declarations have been submitted through the CHIEF (Customs Handling of Import & Export Freight) system, however HMRC has taken the decision to launch a replacement called CDS (The Customs Declaration Service).

CDS becomes mandatory from these dates:

Import Declarations: 1 October 2022

Export Declarations: 1 December 2023 [delayed from 1 April 2023]

HMRC are currently trying to encourage businesses and intermediaries to make the switch to CDS now rather than waiting until the deadline.

What is changing?

The format and type of data on the customs declaration will change.

The CDS declaration will use ‘data elements’ rather than ‘box numbers’ to present data and in some circumstances, more detail will be required to action a movement than under the current system.

You will need to ensure you receive copies of the CDS declaration for your records as once the switch from CHIEF to CDS occurs, you will no longer receive key customs documents such as CHIEF format C88 Declarations or E2 Entry Acceptance Advice forms. Declarations that are made using CDS will use a CDS declaration made using a CDS compatible submission portal.

Most businesses will be using an intermediary such as a freight forwarder / fast parcel operator for their import/export movements and to submit declarations. It is this intermediary who will need to input the necessary information into the CDS system.

Switching to CDS

For most businesses, the main action will be to contact your customs agent to:

• Determine the date your agent will be switching to CDS
• Agree any further information that you will need to provide to allow the intermediary/agent to continue to act as declarant on your behalf. This may include requirements to:
  • Sign an updated direct or indirect agency agreement
  • Provide updated standing instructions with expected commodity and procedure codes
  • Provide more information regarding the context of a transaction and how the value of the goods has been determined.
• Confirm the method of payment that will be used for future import liabilities (See Methods of Payment below)
• Grant agent authorities on your CDS account where required

Access to CDS

Businesses should ensure they are aware of how to access their CDS account when required.

If you have accounted for any of your previous imports using Postponed Import VAT Accounting (PVA), you should already have a CDS login to retrieve PVA statements.

First time access can be applied for using the link here where required: https://www.gov.uk/guidance/get-access-to-the-customs-declaration-service

Our Postponed Import VAT Accounting Guide also includes instructions of how to gain access to your CDS account: https://www.pkf-francisclark.co.uk/wp-content/uploads/2021/04/Import-VAT-Guide-St2.pdf

Methods of Payment

There are a variety of methods which can be used to pay for import liabilities under the CDS system including:

• Immediate Payment: By cash, credit card, cheque, electronic credit transfer
• Cash Account: Payment through a Cash Account allocated by HMRC
• Deferred Payment (3rd Party Account): Using a 3rd party deferment account (typically your agent’s)
• Deferred Payment (Own Account): If you hold a deferment account held in your own name

Depending on the regimes and reliefs used by your business, you may also need to provide individual guarantees or make use of a General Guarantee Account.

CDS includes an optional new way to pay import liabilities called the ‘Cash Account’. Every business with an EORI (Economic Operators Registration and Identification Number) has automatically granted a Cash Account number. Money can be paid into the account in advance and is drawn down at the time of import. HMRC provide further guidance here: https://www.gov.uk/guidance/use-a-cash-account-for-cds-declarations

Deferment Account Holders

If you hold a duty deferment account in your own name, you will need to provide a new Direct Debit Instruction to ensure you can continue using the account in CDS. This can be actioned through the Duty Deferment section of your online CDS account:  https://www.gov.uk/guidance/set-up-a-direct-debit-for-a-duty-deferment-account-on-the-customs-declaration-service

Authorising your Agent in the CDS Account

Whether you need to authorise your agent will depend upon the method of payment that will be used to pay your import liabilities after the switch to CDS.

If you intend to pay your liabilities using a deferment account in your own name, use your cash account or secure duties using a general guarantee account, you will need to grant your agent an access authorisation.

The process for granting authorisation is actioned by clicking on the ‘manage account authorities’ hyperlink on the front page of your CDS account. You will need to select ‘add agent’, click on the relevant account and gives details including the EORI number of the forwarder and period you wish to grant authorisation for.

If you make use of an agent’s deferment account, this can continue (provided you have the agent’s agreement) without any new authorisation required on the CDS login.

If all your imports are duty free goods and you intend to account for VAT using PVA, no method payment authorisation will be required as no liability will be due