If you are involved in the international trade of goods, the process for declaring your shipments is set to change in the near future.
A new system is to be implemented for the 141,000 traders currently involved in making Customs declarations for imports and exports to countries outside of the EU. Depending on the Brexit negotiations, the requirements for declarations could also be extended to include shipments to and from EU countries.
The Customs Declaration System (CDS), a Customs handling programme for the declaration of imported and exported goods, will replace the current CHIEF system. (Customs Handling of Import and Export Freight). The system monitors the UK’s international supply chain, to ensure that appropriate duties and levies are paid, and that any relevant licences relating to the commodities have been obtained, as well as ascertaining if any further checks are required on the goods by Border Force.
Changing EU legislation led to the implementation of a new Union Customs Code (UCC), designed to streamline Customs legislation globally through providing a unified process for over 80% of countries. As part of the UCC, it is required that all Customs communications need to be made via a computerised process by December 2020, which will be made possible via the introduction of the CDS.
Due to age of the current CHIEF system (over 20 years), it has been deemed that it will be more cost effective and less cumbersome to introduce the new system in its place.
The benefits of the new Customs Declaration System include:
Latest estimates from HMRC suggest that they expect the full implementation of new system to be in place by March 2019, when the UK is planning to complete the process of leaving the EU. To help ensure a smooth changeover and limit risk, the transition from CHIEF is expected to begin from August 2018.
The UK’s decision to leave the EU brought about additional considerations to the development of the new Customs system.
There are some concerns surrounding the new CDS due to the impeding ‘Brexit’ situation, namely that it will not be able to handle the required amount of declarations should traders who trade with the EU also be required to make Customs declarations.
Whilst the new system has been tested to cope with 180 million declarations, estimates suggest that, based on current UK trade levels, and depending on the deal reached, following ‘Brexit’ the number of Customs declarations could potentially increase more than three times the current figures, from around 55 million to around 255 million per year.
If a deal is not struck for the UK to continue to operate within the EU Customs regulations, suggestions are that the new system will still be sufficient if the UK reverts to trade under the World Trade Organisation (WTO) rules. Equally, if the UK is able to achieve a negotiated agreement with slight variations to the UCC, relatively simple changes to the programme will work. Even operating with a more extreme change to Customs declarations, the system could still be workable, though obviously with upgrades required, for which additional investment will be necessary.
What is clear is that a new system will be required in any scenario whereby declarations are required upon UK EU imports and exports as the existing system (CHIEF) can only process around 100 million declarations per year.
There is no need to worry about the forthcoming changes to the Customs system. Velta’s experienced Customs Compliance team are able to handle your Customs Clearance declarations on your behalf. For more details, please get in touch.