HMRC Customs Declaration Service: how to transition from CHIEF

UK businesses involved in the import or export of goods will soon need to transition to HMRC’s customs IT platform, Customs Declaration Service (CDS) which replaces Customs Handling of Import and Export Freight (CHIEF).

Closure of the CHIEF system will be done in two stages:

• Import declarations will close from 30 September 2022
• Export declarations will close from 31 March 2023.

CHIEF stopped accepting registrations for new importers in July.

HMRC wrote to businesses at the end of May to inform them of the changes and what they’d need to do to transition successfully.

One of the main differences between the two systems is around efficiency: CHIEF uses paper-based rules and Community Customs Codes whereas CDS uses Union Customs Codes through data processing functionality.

Custom codes used within CHIEF are generated for each goods item whereas CDS uses codes that are more generalised and are dependent on circumstances.

CDS may be more flexible but it’s also more complex.

CHIEF is based around paper forms in terms of design, so many boxes accept free text. CDS however relies predominantly on codes. It includes more data elements than the previous system to allow for varying circumstances. 

It’s important that accountants and the businesses they support who will be affected by these changes become familiar with CDS.

We spoke to several accountants to ask their views and advice on transitioning to the new system.

Ensure appointed customs agencies are CDS-compliant and make use of HMRC’s ‘Trader Dress Rehearsal’ software

Christine Newitt, VAT spokesperson, Kreston Global and VAT Director, Duncan & Toplis

CHIEF has been running for almost 30 years, starting at a time when hand-completed paper forms were the norm and there were fewer imports and exports.

HMRC recognised the need to move onto a modular, flexible, data-driven system several years ago, so the phased move should mean that this final switch over phase is not the first time businesses have heard of CDS.

However, HMRC’s regular CDS updates have been broadly ignored. The latest round of communication has sparked concern and queries by businesses of all sizes, given how soon CHIEF is to be closed.

Next steps:

• Businesses who appoint a customs agent, freight forwarder or fast parcel operator should ensure their customs service is CDS-compliant.
• Businesses that submit their own declarations or intend to in the future should investigate potential CDS-compliant declaration software.

HMRC has collated a list of known providers here: https://www.gov.uk/guidance/list-of-software-developers-providing-customs-declaration-support.

• HMRC has also provided a ‘Trader Dress Rehearsal’ service for businesses to familiarise themselves with CDS declarations using live or demo data without financial payments or licenses or quotas being affected.

Verdict: Ensure the appointed agency or company is CDS-compliant and make use of HMRC Trader Dress Rehearsal software to familiarise yourself with CDS before CHIEF closes.

Complete necessary admin tasks to ensure a successful transition

James Lindley, Partner, Castell Wealth Management

HMRC is presenting CDS as a time-saving platform allowing businesses to submit customs documents digitally and safely using the Secure File Upload service.

CDS provides:

• Access to financial information in a single financial dashboard (view account statements, make payments and control standing authority).
• Real-time notifications on customs declarations and movements
• Access to a duty deferment account.

Next steps: Businesses need an Economic Operator Registration and Identification Number for CDS as well as a Government Gateway User ID & Password.

Businesses can then ask an intermediary or authorised software provider to complete the declaration.

Verdict: CDS is data-driven and future-fit but admin tasks must be completed for a successful transition.

Be prepared for potential administration issues

Shaun Hall, Customs Partner and Gareth Bevan, VAT Partner, RBC Customs

CHIEF is based on the Community Customs Code (CCC) and Single Administrative Document (SAD) Harmonisation rules (boxes) whereas CDS is based on the Union Customs Code (UCC) and Data Integration and Harmonisation rules.

It’s a flexible modular platform that is built to scale with the growth of international trade. There is a greater emphasis on digitisation compared to CHIEF. This has interactions with other aspects of VAT and customs compliance.

Some of our clients have already experienced problems due to having multiple, unlinked Government Gateway accounts and had difficulties with the sign-up process. We recommend beginning the transition process as soon as possible to allow for potential issues.

Next steps: Undertake the actions listed in HMRC’s guidance (see Trader Checklist).

Verdict: Clients have already experienced administration issues when registering with CDS, so be prepared to contact the HMRC helpdesk if there are issues.

CDS is more detailed than its predecessor, so early planning is key

Ian Worth, director, VAT and customs duty services, Crowe

CDS requires greater accuracy of details including buyer and seller details and valuation methods and clarity around how goods are to be valued for import

Businesses’ customs agents should be liaising with their software provider now to manage the migration from CHIEF to CDS.

As CDS is more comprehensive in its data coverage, businesses need to provide clear instructions to customs agents to avoid delays or administrative headaches.

Responsibility for the declaration of complete and accurate information rests with the importer, not with their customs clearance agent, so early planning and open dialogue is key.

Verdict: CDS is more detailed than its predecessor so early planning prior to transition is key.

Transition to CDS now to avoid unnecessary import delays later

Ben Knock, MD, VAT Compliance, Consulting and Reclaim, Ryan

HMRC has contacted all UK VAT-registered businesses who have imported or exported goods to advise them about the switchover to CDS and provided checklists and guidance.

However, there is a difference between HMRC advising on an imminent change and a business taking action.  With barely two months to go until the imports deadline, I’m not convinced that every affected business has addressed what’s needed, especially non-established businesses where written correspondence often takes several months to actually reach them.

Some traders are even delaying being CDS-ready as they have invested in other activities that have previously been postponed or delayed by HMRC. Delaying transition could cause businesses significant delays to importing goods.

Next steps: UK VAT-registered businesses that import and export goods need to transition now to avoid delays.

Verdict: Take action now to avoid unnecessary import delays later.

Annie Makoff is a freelance journalist and editor.