CDS is intended to replace the existing customs handling of import and export freight (CHIEF) system, which currently processes declarations to facilitate the international movement of goods between the UK and non-EU countries, and is nearly 25 years old.

The decision to replace CHIEF with CDS was made before the EU referendum, but HMRC has said CDS will be scaled to handle any potential increases in the volume of declarations that may result after Brexit.

Unlike CHIEF, CDS will be accessed on Gov.uk using a government gateway account – if traders use a customs declaration software package, they will need to follow the instructions and documentation from their supplier.

As well as offering the same facilities as CHIEF currently, CDS will offer several new and existing services in one place - for example, traders will be able to view previous import and export data on pre-defined reports, check the tariff, apply for new authorisations and simplifications, and check their duty deferment statement. Online help will include self-service tools, guides and checklists.

HMRC says some additional information will be required for declarations in order to align with the World Customs Organisation Kyoto Convention, currently being implemented in the UK through the Union Customs Code (UCC).

This includes an audit trail of previous document IDs; details of additional party types, such as the buyer and seller; possible additional commercial references or tracking numbers; levelling – change between ‘header’ and ‘item’ for some data items.

To align UK customs data with international standards, there will also be changes to the location of goods identification (based on UNLOCODE); the warehouse type code list; item tax lines, including method of payment codes; unit of quantity codes (ISO); the way customs procedures are quoted; and the number of items on a declaration – CDS will allow a maximum of 999 items on a customs declaration instead of the current 99 items on CHIEF.

HMRC is currently building and testing CDS with industry, software providers and community system providers (CSPs), who operate computerised inventory systems that control the physical movement of import and export freight at UK ports and airports.

CDS will be phased in between August and early 2019, with CHIEF continuing to run during this time to aid the transition. Importers, exporters or their agents will be informed by their software provider when they need to provide the additional information in order to start making declarations on CDS.

HMRC says those wanting to keep informed about CDS should register for the HMRC business help and education email service, where CDS updates will be under the education topic ‘trading with other countries’.

There will also be regular updates about CDS on Gov.uk and through trade associations.

In November 2017, the public accounts committee (PAC) report on Brexit and the future of customs accused HMRC of not doing enough to manage what MPs called ‘the huge uncertainty’ faced by a large number of traders. Estimates suggest that 132,000 traders will have to make customs declarations for the first time once the UK leaves the EU. PAC recommended traders should be informed of the CDS timeline and progress by January 2018 to give sufficient time to prepare.

PAC also raised concerns that HMRC had not agreed the amount of additional funding required to implement an expanded version of CDS, and warned work on the project could be in jeopardy given HMRC’s commitment to other technology-driven initiatives, including Making Tax Digital.

Report by Pat Sweet