The introduction of the Customs Declaration Service (CDS) is an important milestone for any Yorkshire business importing into the UK. Let’s not underestimate its importance – if you don’t sign up for the new system by October 1, there’s a real risk your goods won’t be able to enter the UK.
Submission of import declarations from this date must be done through the new system, in order to continue bringing goods into the country.
The message is clear from HMRC, and regional businesses have taken notice and signed up for the new CDS. According to BDO Rethinking the Economy’s latest survey of 500 mid-sized businesses, 48% of Yorkshire businesses affected by the change have registered and authorized their freight agents within the new CDS.
However, they admit that there is still work to be done before the switchover takes place in less than two months.
The reality is that this is more than just a tick box exercise; registering for the new CDS is simply not enough – it requires a deeper understanding of current customs duty processes and practices and the adjustments that may be required to comply with the changes.
HMRC has clarified its position and set out a number of actions including ensuring you have an EORI number, registering and activating a Government Gateway account, registering and activating your customs declaration service account, deciding and save your payment method and details. on CDS, naming your freight forwarder(s)/customs broker(s) in CDS and ensuring that your tax and logistics teams are ready for the changes to issue new broker instructions with the increased CDS dataset.
But this is only the beginning. The changes bring with them a number of considerations that the CHIEF system simply did not justify.
The software, which has been talked about for many years in customs circles, will look in much greater detail at the business of each of the UK’s 150,000 importers.
New data fields in CDS will allow HMRC to have access to more information about a company’s approach to customs valuation than ever before – data that will ultimately feed into future audits compliance.
There is no doubt that HMRC has eased off in recent years, in terms of compliance audits; however, the introduction of the new CDS is likely to invigorate the tax administration and provide important ammunition in its assault on companies that violate customs regulations.
Significant penalties for not doing so are unlikely, due to the nature of how customs civil penalties are applied, but failure to keep proper records and request certificates of origin from suppliers first date could result in backdated customs duty assessments which can have a significant effect on a company’s profit margin.
Lyndon Firth is an indirect tax partner at BDO LLP in Leeds.