Upcoming changes affecting business that import goods

HM Revenue and Customs have announced that the way import declarations are submitted will change. A new IT system called the Customs Declaration Service (CDS) will replace the existing Customs Handling of Import and Export Freight (CHIEF) system

After 30 September 2022 all import declarations will be submitted to HMRC using CDS. From 31 March 2023 this will be extended to cover export declarations.

This will have a significant impact on businesses that submit Customs Declarations to HMRC, e.g. import agents but is also likely to have some impact on any business that imports goods. Even where businesses use a customs agent or freight forwarder to handle their Customs declarations some action will be necessary by client to prevent disruption:

1. Sign up the CDS, if this has not been done already
2. If you use a duty deferment account make sure a new direct debit is in place
3. Contact your import agent to make sure they are prepared for the changes and have all the necessary information and authorities required.

The CDS system requires a more extensive set of data and in many cases uses different codes to the current system. Customs agents may require additional information in order to get goods through Customs and into the UK.

Payment processing methods will also be different, duty deferment account holders will need to set up a new Direct Debit Instruction (CDS uses a different bank account to the current CHIEF system!) and businesses may have to authorise their agent in CDS so they are able to use the duty deferment account.

CDS has a dashboard showing which customs agents can use a business’s accounts. It should be possible to check the appropriate authorisations are in place.

HMRC will no longer issue monthly Import VAT Certificates by post. Instead, businesses will have download the certificate directly from the CDS. Any business wanting to download their certificate must therefore subscribe to the Customs Declaration Service.

Having a copy of the Import VAT certificate is important. HMRC expect VAT registered businesses to hold these certificates if a business wants to reclaim the import VAT they have paid. To avoid any potential problems with HMRC, import VAT certificates need to be downloaded and saved promptly.

VAT registered businesses importing goods will usually be able to use the Postponed Import VAT Accounting (PVA) system to deal with VAT. This system allows import VAT to be paid and, subject to the normal restrictions, reclaimed simultaneously through the VAT return. This gives a distinct cash flow advantage. It may also reduce or do away with the need for a guarantee for payment of import taxes.

Businesses using the PVA system should already be accessing their monthly Postponed Import VAT statements through the CDS system. These show how much import VAT to enter on the VAT returns.