What Is the Customs Declaration Service?

In October 2022, the UK customs authority HMRC replaced its Customs Handling of Import and Export Freight (CHIEF) system with the Customs Declaration Service (CDS). While this change was necessary for HMRC to comply with the EU customs requirements outlined in the Union Customs Code (UCC), it may have led some cross-border eCommerce companies to wonder what the Customs Declaration Service is and how it might impact their business.

As one of the leading providers of cross-border solutions in the UK, Parcelhub has familiarised itself with this new customs declaration system. In this article, we will outline what the Custom Declaration Service is, how it differs from the CHIEF system and what the change means for our international clients.

What Is a Customs Declaration?

Whether you are an individual traveller or an eCommerce company leveraging international freight forwarding services, it is necessary to complete a document known as a Customs Declaration when importing or exporting goods from one country to another. These documents include lists and detailed descriptions of any goods being transported, which allow customs authorities to check the type of goods that are entering or exiting their country.

It is important that customs authorities can make these checks for the following reasons:

• To prevent goods that are harmful to the economy or environment from entering a country. 
• To perform surveillance on goods exiting their country and restrict prohibited items from leaving their jurisdiction. 

Why Has CDS Replaced CHIEF?

Introduced in 1994, the CHIEF Customs Declarations system predates HMRC by over a decade and has been used by the UK customs authorities for close to 30 years. HMRC evaluated that it would be more practical to design a new system in line with the UCC, rather than try to adapt CHIEF to comply with the latest customs requirements.

How Is CDS Different to CHIEF?

Despite fulfilling the same purpose, the Customs Declaration service differs greatly from the CHIEF system. Its modular design makes CDS much more flexible than CHIEF, which should safeguard the system as international trade continues to grow and develop.

While this is promising for the future of international trade, in the meantime, the changes that the CDS has already implemented could pose challenges for cross-border shipping retailers who are accustomed to the previous system. Here are the most fundamental changes to the customs declaration system:

Changes to UK Trade Tariffs

The most significant difference between CHIEF and the Customs Declaration Service is the structure of their international codes. While there are some consistencies between the codes used by CHIEF and CDS, there is no direct correlation between CHIEF Customs Procedure Codes (CPCs) and CDS CPCs and Additional Procedure Codes (APCs).

The introduction of APCs allows cross-border businesses to report one or multiple three-digit codes in the CDS Data Element, making this method of reporting much more comprehensive than the Boxes used in CHIEF declarations. While this has made reporting more transparent for customs authorities, it does mean that more extensive data sets are expected to be supplied by business owners.

For more information about new procedure codes, data sets and declaration completion rules, we recommend referring to the UK Trade Tariff: Volume 3.

Changes to Country Codes

As of January 2022, the country code ‘EU’ cannot be selected as an option for the country of dispatch or origin. It is now necessary to include the codes for specific countries within Europe, such as ‘FR’ for France.

Changes to Payment Processing

The CDS has made multiple changes to how declaration payments are processed, and cross-border businesses will have to make the respective adjustments depending on their prior payment method. 

Those with Duty Deferment Accounts will need to arrange new Direct Debit Instructions, while retaining the information of their original Direct Debit arrangements. This information is still necessary for processing any deferred declarations created while the CHIEF system was still in use.

For traders who previously used Frontier Declarations and Immediate Payments, there are multiple alternative methods of payment to choose from that are compliant with the Customs Declaration Service. Depending on the nature of your business, you may choose from one of the following accounts:

• Cash account
• Deferment account
• General guarantee account
• Individual guarantee
• Personal debit or credit card
• Corporate debit or credit card

Since the introduction of the CDS, all Flexible Accounting System (FAS) accounts have been closed. Account holders were automatically issued with Cash Account upon registering for CDS.

How Does the CDS Affect My Business?

While the Directors General for Borders and Trade at HMRC are confident that the Customs Declaration Service is the first step towards realising “a world-leading fully digitised border that will help UK businesses to trade and to prosper,” this is yet to be seen. For now, the introduction of CDS could pose complications for cross-border businesses that have struggled with the transition to the more comprehensive system.

If you have not yet registered with the CDS, we recommend that you have the following three pieces of information to hand:

1. Your Unique Taxpayer Reference number
2. Your Government Gateway account details
3. Your Economic Operator Registration and Identification (EORI) number

How can Parcelhub help with the transition to CDS?

At Parcelhub, we appreciate how difficult adapting or even understanding the changes introduced by the Customs Declaration Service can be for business owners. When you partner with Parcelhub, you are assigned a dedicated account manager, who is more than happy to discuss the changes to the customs declaration system, as well as assist you with registration and the transference of your payment accounts.

For more information about our cross-border services or what the Custom Declaration Service is, please contact us today or refer to our resources on the data requirements for the CDS and updated commercial invoice requirements.