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United Kingdom: New Customs Declaration Service Cash Accounts Explained

published on 21 september 2022 | reading time approx. 4 minutes

In September 2022, HMRC will replace the existing Customs Handling of Import and Export Freight system (CHIEF) with a new Customs Declaration Service (CDS), a change that has been in progress for several years.

CDS is expected to be more secure and scalable to cope with increasing export and import capacity and declaration volumes in a post-Brexit UK economy.

All businesses that import or export goods will need to migrate from CHIEF to CDS, which will take over as the sole customs platform and be mandatory from 31st March 2023.

Companies using CDS for their declarations will also see changes as the Flexible Accounting System is wound down and replaced with Cash Accounts.

The Customs Declaration Service

CDS is already in use, including for goods movements between Britain and Northern Ireland, and has performed well since its initial staged introduction began in August 2018.

One of the key changes is that CDS handles every declaration category and operates the complete UK Trade Tariff, providing greater flexibility through one cohesive system.

While the transition may require re-training for some businesses, switching from CHIEF to CDS is likely to be welcome news for companies who need to manage transactions concurrently through two platforms.

Migrating to the Customs Declaration Service

Whether a business uses a customs broker or has an in-house import and export management team, they will need to register for CDS if they have not already done so.

Companies can manage their transactions through the CDS portal using their Government Gateway credentials.

Declaration payment methods are changing, although the impact will depend on whether the business currently pays through:

Guarantee accounts
Individual guarantees
Duty deferment accounts
Immediate payments
Flexible Accounting System accounts

If the business has an existing duty deferment account, they will need to amend their direct debit instructions because CDS uses a separate payment system from CHIEF.

Any duty or VAT liability declared through CDS requires an active direct debit to enable HMRC remittances.

Customs Declarations Through CDS

The information needed to submit a CDS declaration is much more in-depth than required through CHIEF, as CDS includes several compulsory data elements, including:

Goods identification
Shipping details
Value of goods
Transaction parties
References
Transport information

The CDS communication toolkit is available online and includes migration checklists and declaration instructions to help UK businesses prepare.

It includes a link to the UK Trade Tariff resource, which enables users to research commodity codes and applicable licences that apply to their goods, and determine the tax and duty payable.

Changes to the Customs Flexible Accounting System

CHIEF is being fully wound down on 31st March 2023, but the transitional phase is split into two elements:

Import declarations through CHIEF will close on 30th September 2022.
Export declarations will close on 31st March 2023.

CDS Cash Accounts are a new payment method that takes over from the Flexible Accounting System, and each business will have a Cash Account after they subscribe to CDS.

Once registered, traders can use CDS Cash Accounts to:

Pay import taxes and duties.
Withdraw funds.
Authorise an agent.
Deposit payments.

As previously mentioned, direct debit instructions for duty deferment accounts will need to be updated.

Importers also need to grant Standing Authority through their CDS dashboard to authorise a clearing agent to access their deferment account.

Alternatives to a CDS Cash Account

Companies can choose which payment method they prefer and view balances and payment details through the CDS Financial Dashboard.

There are several primary payment options, aside from a Cash Account:

Duty deferment accounts work similarly to CHIEF, although with different direct debit details.
Users can make immediate payments via online or telephone banking, BACs, CHAPS or cheque, with corporate debit or credit cards accepted.
Individual guarantees are suitable to cover one-off imports or higher value transactions.
General guarantee accounts provide several guarantees from one account, allowing companies to continue importing while a disputed liability is resolved.

If an account holder wishes to grant authority to an agent or colleague to view their Cash Account, they can permit them - but may limit which accounts they have access to.

Traders may also provide a customs agent or freight forwarder access to their CDS Cash Account to submit import or export declarations on their behalf.

Completing a CDS Declaration With a Cash Account

The CDS system requires several extra information fields to be completed before you can pay duties with a Cash Account.

Users can choose to make an immediate payment from their Cash Account balance by selecting payment method 'P' by:

Clicking on the details section and amending their preferences in the Payment Information tab.
Selecting P from the drop-down menu or manually entering P in the Method of Payment box.

If a declaration is submitted without any payment option selected, HMRC may assume that the importer will pay the duty or VAT before the goods are released and will require immediate payment.

When customs accepts the declaration, it will change the transaction to 'final tax notice' status, with a payment reference inserted into the Notes section on the information page.

Traders must log in to their CDS Cash Account and enter the payment reference to complete the remittance.

Registering for CDS and Trader Dress Rehearsals

Although CDS is likely to be more efficient for most businesses, it is important to begin the migration before the 30th September deadline to avoid any delays or disruption as internal systems transfer over.

Businesses without a Government Gateway number or EORI number will need to register beforehand - EORI numbers must begin with GB.

From there, the responsible owner or import/export manager can log into their Government Gateway account and get access to CDS by entering:

The relevant GB EORI number and UTR.
The business address and incorporation date.
National insurance details.
An email contact address.

Once registered, traders can use a free 'dress rehearsal' simulation to replicate scenarios related to their declarations, test software compatibility and for user training purposes.

The Trader Dress Rehearsal (TDR) system allows declarants to submit import and export declarations, cancellations and amendments and refer to real-world accounts such as duty deferment accounts to practice end-to-end submissions.

TDR is not live and is used solely for testing and training, so it will not make any payments, create legally valid declarations, or transmit data to CHIEF or CDS.