Customs Declaration Service (CDS) and VAT

Each time that goods cross the border of the UK, a broad spectrum of data regarding the item itself as well as the circumstances surrounding its movement usually has to be declared to HMRC. In the past, customs declarations were all submitted via the Customs Handling of Import and Export Freight (or CHIEF) system. 

These days, though, HMRC has moved into the 21st century and has launched a replacement known as the Customs Declaration Service or CDS. It is important to understand this new system, including how to subscribe to it and how it works, so that you can make the switch seamlessly and without any difficulties. 

When Does CDS Become Mandatory?

For import declarations, CDS became mandatory on 1st October 2022, but for export declarations, CDS will not become mandatory until 1st December 2023. That means that companies and individuals trading across the UK border have a little more time to get to grips with the changes. 

Nevertheless, HMRC are working hard to encourage intermediaries and businesses to switch to using the CDS system now instead of waiting until the end of the year. 

What Do The Changes Mean?

The type and format of customs declaration data will change. “Data elements” will be used on the CDS declaration instead of “box numbers” when presenting data. In some situations, actioning a movement will require more detail than under the former system. Since most businesses use fast parcel operators or freight forwarders when importing or exporting goods across the border, the intermediary will take responsibility for inputting the appropriate details into the system.

Making The Switch To CDS

In the case of most businesses, their primary action will involve contacting their customs agent in order to determine which data the switch to CDS will require and to agree on any further data that you will have to supply in order to allow them to carry on acting on your behalf as a declarant. 

You may need to sign a new agreement or provide updating instructions with expected procedure and commodity codes, or supply extra information regarding a transaction’s context and how the goods’ value has been calculated. You may also need to confirm the payment method to use for all future import liabilities, or grant the agent authority on the CDS account to manage the import process and payment of charges.

Accessing CDS

All businesses need to make sure they know how to gain access to their CDS account. Any business that has previous accounted for their imports using PVA (Postponed Import VAT Accounting) will already have their own CDS login. 

For those gaining access to the system for the first time, an application can be made via this link.

Which Payment Methods Are Acceptable?

There are several payment methods that are acceptable for paying for all import liabilities on the CDS. They include payment by credit card, cash, electronic credit transfer, or cheque as well as payment via an HMRC-allocated Cash Account. Using third party deferment accounts or personal deferment accounts is also possible. 

Authorising Agents

Depending on which payment method you wish to use to pay import liabilities following the move to CDS, you may need to authorise your agent. Anyone who is intending to pay their liabilities by using a cash account, general guarantee account or deferment account in their own name will need to grant access authorisation to their agent. 

There will be no need for any payment authorisation if all imports are goods that are duty free and you will use PVA to account for the VAT.

How To Subscribe To CDS

When a Government Gateway user ID is subscribed to the CDS, it makes a number of things possible including the ability to submit export and import declarations using software, pay import VAT and Customs Duty, and to get Postponed Important Vat statements or certificates to allow the VAT return to be completed. 

To subscribe, the Government Gateway password and user ID that is used for the organisation or business, or the individual themselves in some cases, will be required. For anyone that has no user ID, it is possible to create one at the time of beginning the subscription process. It is important to note, however, that agent Government Gateway user IDs cannot be used. 

The information that must be entered includes: 

• The EORI (Economic Operator Registration & Identification) number starting with GB.
• The UTR (Unique Taxpayer Reference) number.
• The business address held on the official customs records.
• An sole trader or individual’s National Insurance number.
• The date on which the business was established.

The Customs Declaration Service account and EORI number will then be linked to the specific Government Gateway user ID and it is impossible to apply for multiple EORI numbers using a single Government Gateway user ID.

Following subscription, access is either granted within two hours, or within five business days should HMRC need to carry out further checks. Once access is granted, it is then possible to sign into the system using the Government Gateway password and user ID and then use any CDS service that is available on the system including: 

• Getting a postponed import VAT statement
• Getting an import VAT and duty adjustment statement
• Using a cash account to make CDS declarations
• Checking how VAT and duties on imports can be paid
• Setting up direct debits for duty deferment accounts
• Uploading documents and getting messages regarding customs declarations
• Managing email addresses for the Customs Declaration Service

Can Team Members Be Added To The Subscription?

In some cases, more team members from a business may need to use the subscription to CDS as well as the services that it will give access to. It is possible to add more team members when using a business tax account. It is also possible to control what every team member is able to access for extra security.

Where Can I Get Support And Help About CDS?

For anyone who has general questions regarding the CDS, it is possible to contact the general enquiries team for imports and exports by clicking here.