If you currently import or export goods you will be familiar with the current Customs Handling of Import and Export Freight (CHIEF) system that is used to process all imports into the UK.
The latest communications from HMRC suggest that they are still on track to replace CHIEF with the new Customs Declaration Service (CDS). The introduction of CDS started in August and the facility to make frontier declarations should be available anytime soon. Although, it remains to be seen how many importers and agents will be ready to use the new system.
We know there has been a lot of activity by importers looking to amend IT systems to ensure they can interface with CDS. However, it is not just the case that IT systems should be ready. A fundamental change within CDS is the level of detail that will have to be provided; 76 “data elements” (for goods to be declared into free circulation), as opposed to the 54 boxes on the current C88.
It doesn’t take a genius to work out that a requirement to provide more information to HMRC increases the risk of errors being found. It is this increase in risk that should give pause for thought for anyone considering switching from CHIEF to CDS until they are confident of the import procedures they implement.
At a basic level CDS requires the “data elements” for the:
In most cases, the exporter will be the seller and the importer will be buyer but does this match with the contractual terms, delivery terms and who will be discharging the import liabilities? Plus, the ability to recover import VAT has often been overlooked with many an “importer” recovering import VAT when they have no right to. The new data elements will make the supply chain much more transparent.
A common thought process for importers is to consider that a lot of this responsibility has been “outsourced” to their agent. However, it is highly unlikely that any relationship will totally discharge the importer from any penalties and interest. At best, if you have an “indirect representative” relationship, you may only “joint and severally” liable. The majority of agents, however, will represent importers on a “direct” basis, leaving the importer liable to all costs. Your instructions to the agents will therefore become more critical.
It is only in recent months that the information requirements for CDS have been published and are starting to be understood. Just focusing on the IT systems is not the end of the story, understanding your supply chain and agent relationships is just as important.
If you would like to understand more about your imports and CDS then please contact your usual Customs Connect advisor or email email@example.com.
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