HM Revenue and Customs launches the new Customs Declaration Service (CDS) for exporters on 30 November, aiming to modernise the declaration process for goods being sent out of the UK, as a precursor to the government’s long term goal of creating a single trade window.
The old system, Customs Handling of Import and Export Freight (CHIEF) closes for good on 30 March 2024. Before then, traders must decide whether to invest in modern software that digitalises their back office and interfaces directly with HMRC’s new CDS system – or find some other way to adapt.
What’s new about CDS?
The UK government wants a fully digitised border that can boost trade and competitiveness, while reducing costs for the taxpayer. CHIEF was designed around traditional paper processes whereas CDS is designed for electronic communication and automation. It uses Union Customs Codes and data processing rules that are in line with the EU’s customs requirements, meaning that CDS procedure codes and data elements are different from those of CHIEF.
Direct communication with HMRC
All exporters who trade from the UK will be affected by HMRC’s new customs declaration system – and many will experience benefits once the transition is complete. Import declarations already run on CDS and lessons have been learned that will hopefully avoid the outages and VAT issues that caused significant problems for importers in 2022.
For exporters with modern CTRM software, CDS promises to make filing customs declarations online more efficient and accurate. Export declaration glitches should be easier to fix as well. The new CDS has only 200 error codes compared to CHIEF’s 4,000. Reduced dependence on consultants, brokers and agents could be an additional potential saving for exporters of waste paper, waste plastic and metal recyclables for example.
Getting ready for 30 March 2024
Of course many exporters won’t be persuaded that the benefits of CDS are worth the effort and disruption of moving across from CHIEF. But like it or not, CDS is happening. Decisions need to be made and action needs to be taken well before the 30 March 2024 deadline. So what are your options?
Option 1: Do nothing
This is not an option for anyone who plans to continue trading across international borders and making export declarations to HMRC after 30 March 2024. At the very least, you need to get to grips with the new requirements of CDS – assuming you have the in-house resources to do so.
Option 2: Employ customs agents and brokers
Agents and brokers will be ready for CDS and most possess in-house software to facilitate the declaration process for you – although this comes at a price. Leveraging the expertise of specialists made sense to many busy traders when customs declarations involved complex paper-based processes. Under the simpler CDS regime, most of the information still needs to come from you, the trader.
Option 3: Digitalise your back office
The advent of application programming interfaces (API) and affordable trading software solutions for smaller traders mean that data can travel securely into CDS directly from your own system. Moving to a modern digital back office has many advantages for exporters beyond communicating with HMRC. With all of your data in one place, you can start automating documentation, managing your photos better, generating accurate reports and exchanging data in real time with partners such as shipping lines and freight forwarders.
You’ll also be prepared for a digital future that is set to include electronic bills of lading and other innovations that the recently-passed UK Electronic Trade Documents Act is ushering in. The CDS is just one element of a wider digital transition that is gathering momentum across international trade.
