We recently held a roundtable discussion with customs brokers, forwarders and importers/exporters to discuss the move to CDS. Below we share some observations and comments from the roundtable.
The transition to CDS will potentially have a bigger impact on the industry than Brexit. Businesses must prepare now for the upcoming changes.
The main concern in the transport and logistics industry is that many customers of customs brokers and freight forwarders, particularly smaller businesses, are not prepared for the CHIEF switch off and transition to CDS. Given the impending 30 September 2022 deadline for imports, this is putting pressure on transport and logistics – and associated – businesses.
CDS itself appears to have issues where there are differences between the test and live environments and also the time taken to complete a declaration has significantly increased, at least initially.
UPDATE: Access to CHIEF may be extended
HMRC have launched an online application service, in order to request permission for continued access to CHIEF, where there is a clear business reason.
The Customs Declaration Service (CDS) must be used from 1 October 2022 for import declarations, with CHIEF due to be switched off. However, some businesses are experiencing difficulty in migrating to CDS and so an online service to request permission for an extension to use CHIEF beyond 30 September is now available, if there is a clear business reason.
The online request form can be found here.
Are businesses prepared for the Introduction of the CDS?
Businesses must be aware that they will need to register for CDS through a Government Gateway account, select a payment method to use on the financial dashboard and authorise their customs brokers and freight forwarders to use their deferment account, if they have one. A new direct debit instruction will also need to be set up, as CDS uses a different bank account to CHIEF, so the bank must be contacted. Customs brokers and freight forwarders will also need to be given authorisation to act within CDS, by their customers, so it is important to do this.
Failure to do the above, will result in the entry not being accepted by CDS.
Larger traders that import and export frequently appear to be reasonably well prepared, but not the smaller ones. Training is essential before a business can consider going live on CDS. There are recommended CDS training programmes available, for example, the BIFA e-learning training course, in conjunction with ASM UK, is recommended and details the differences between CHIEF and CDS.
It is also important for businesses to familiarise themselves with the new CDS documentation, such as the CDS tariff, which also includes all the customs declaration rules and guidance. It is essential for businesses to contact software providers and bridge any gaps between the old and new systems, to avoid duplication of entries where possible.
Test & Live Environments
Currently, it appears that not many businesses have used the live platform. Those that have already started to use CDS are still using the Trader Dress Rehearsal (TDR) function. There are concerns that the TDR and CDS do not mirror each other completely and that until businesses go live on CDS, they will not appreciate the impact of the change and the time involved.
As it stands, it is taking a lot longer to prepare a declaration under CDS, which could have an impact on resource which is already under pressure. Therefore, businesses should plan accordingly.
It would also appear that there is no requirement to use the TDR function before going live, so in theory, businesses can go straight to the live environment, without any testing or training.
Delayed implementation and contingency planning
In dealing with HMRC about the expected go live dates, there has been discussion around contingency plans for the possible scenario where goods do not move, and ports and airports suffer delays. This could lead to storage and logistical issues, due to the lack of documentation being successfully and accurately completed to allow goods to be moved.
What would HMRC’s plan be for this potential outcome, as surely they cannot risk ports and airports grinding to a halt?
One view, shared recently by BIFA members, is that HMRC might employ a similar contingency plan to the delayed declaration procedure as they did with Brexit, in order to ensure goods still move -even if the declaration has to follow. However, the concern here again, is that this could result in non-compliance, putting businesses at risk of exposure with HMRC.
There are mixed views as to whether the first transition deadline of 30 September 2022 for imports will be pushed back. Some think it would be a sensible approach, whereas others say there should be no further delay, as the implementation is inevitable anyway
Non-compliance
There are concerns over the accuracy of declarations and non-compliance going forward, with incorrect tariffs potentially being applied, due to the complexity and lack of understanding of CDS. CDS is open to many potential workarounds, which users are likely to find and use, however, this will have consequences.
What now?
From the manufacturer’s viewpoint, the CDS transition is yet another challenge to overcome. Following COVID and Brexit, businesses are fatigued, which is a possible reason for why the take up has been slow. That said, the CDS transition has been in planning for nearly ten years, although it has also been pushed back on several occasions, which is probably why businesses have not invested too early.
The key now for customs brokers and freight forwarders, is to get customers talking, making them aware of the change and educating them.
The potential impact on businesses will be unknown, until CDS goes live for everyone, and CHIEF is decommissioned. As with all change, there will be initial challenges for businesses to overcome and with prices to move goods already increased since COVID and Brexit, this particular change must be well managed and monitored by businesses. However, the intention of CDS is clearly to provide businesses with an updated and modernised import/export system, to replace CHIEF, which has been in existence for almost 30 years.
It is essential that companies take this change seriously and invest in the right people and time to keep on top of the changes and deadlines, as they happen.
Please act now if you have not already done so and contact your customs broker, freight forwarder, or Menzies, for guidance. If you have questions regarding any of this, or require assistance with next steps, please get in touch below