12th December 2018
Clients, representatives from HMRC, the Cross-Government Border Delivery Group and customs professionals gathered at Brunel University on the 27th November for the latest in our seminar series on the new Customs Declaration Service and Brexit. Hosted by Ian Moran, Group Customs and Trade Solutions Manager for Allport Cargo Services, the event was well-attended by over 80 delegates, with a further 70 attending a second seminar in Leeds. Here we summarise the topics covered:
HMRC – an insight into the new Customs Declaration Service
HMRC’s ITDLO Team provided insight into the new Customs Declaration Service. Their role is to promote awareness of new developments within customs and international trade to businesses and colleagues. Allport Cargo Services is one of the first freight forwarding companies that HMRC has engaged with in this way, so this provided a unique opportunity for attendees to gain crucial information.
The current IT system for businesses that import and export goods outside the EU, is CHIEF (Customs Handling of Import and Export Freight), which has been around for 25 years and has had many versions and uses very old technology.
The development of the new Customs Declaration Service was initiated pre-referendum and aims to be a streamlined system requiring different data to be supplied in a different format to legally comply with the EU’s Union Customs Code. The result of the Brexit process will have a significant impact on the requirements for the system. Although still in development, there will be a new CDS Tariff and the system is a component-based architecture created in an agile framework, with prototype testing along the way.
It aims to improve the digital experience for customers and will be scalable to cope with the increased amount of declarations. HMRC described how the system will allow for future trade growth, the ability to include more items per declaration, integrate with other government systems and allow access to declaration information data free of charge.
Delegates were urged to consider becoming an Authorised Economic Operator (AEO), a recognised quality mark that shows a company’s role in the international supply chain is secure and that customs controls and procedures are efficient and meet EU standards. Although not mandatory, it can give quicker access to some simplified customs procedures.
Top take-away points:
- The CDS went live in August 2018 and is being implemented in stages, with rollout due to continue during 2019.
- A multi-channel communications campaign is underway to inform businesses about the CDS.
Businesses are worried about contingency, but CHIEF will still exist and in many cases, dual operation will take place.
- The Customs Declaration Service area on the Gov.uk website will be a valuable source of information, particularly with regards to the new CDS Tariff: how to input correctly; how to navigate; new declaration definitions, categories and codes; all about the data elements that have replaced the box numbers (the information is the same, there are now 157 potential data elements split into eight groups); and commodity codes.
- The biggest change is valuation: duty paid is based on valuation of the goods.
- Businesses will have to work with their software developers to understand the impact of these changes.
Allport Cargo Services already has an open dialogue with customers about the new CDS. With 300,000 customs declarations currently being administered by ACS per year, there are obviously great benefits for clients if their freight forwarding company manages this element of the supply chain. Ian suggested that a phased approach for the transition to CDS would be sensible for clients. He highlighted that this move towards digital recording means there may well be no paperwork involved at all in the customs declaration process, with data being held on the Government Gateway. An audience poll found that most people at the Uxbridge seminar were happy to have this data digitally rather than in paper format, but in Leeds some sort of physical report provided by the system was the preference.
Ian Moran (ACS) – The Latest Brexit Situation
As the Brexit negotiations continue to evolve, Ian gave the latest update on decisions reached at the recent meeting of heads of Government in Brussels, arrangements planned in the light of the latest meetings and what clients should do to prepare.
We know that the UK is due to leave the EU in 2019, but we don’t yet know what customs arrangements will be in place. Ian began by explaining the implications of the Customs Union and the Single Market, stressing that negotiating new comprehensive UK trade agreement with the EU is a priority. The issue of customs is, of course, one of the most complicated areas to negotiate on since the customs processes are so integrated and supply chains are hugely linked within the EU. Currently many of ACS’ customers are looking to set up warehouses in the EU to satisfy EU customers. He also noted that one of the biggest post-Brexit challenges will be to recruit drivers; currently 57% of intra EU cargo road haulage is driven by eastern European drivers.
The real challenge will be trying to get the best deal, so that no customs declarations are required; the time and effort it takes to complete customs declarations are the key issues. Businesses just aren’t ready for a hard Brexit or no deal, because they require time to adapt to any new requirements and these are yet to be defined. With 4.2 million vehicles using the Kent Channel crossing each year, potentially all taking an hour to process, there will be significant queues if customs declarations are required. The UK will probably have to stay in both the Customs Union and many aspects of the Single Market if we want freedom of trade. However, in preparation for all eventualities, Ian suggested companies should ensure they obtain full customs data from EU suppliers.
Top take-away points
- Potential impacts to businesses include: VAT on imports unless there is postponed accounting, border delays, Irish land boundary concerns, implications for EU re-deliveries, legal agreements, currency fluctuation, immigration and potential additional duty costs.
- It’s estimated there will be 200 million additional customs declarations, costing £13bn p/a.
- Customs representatives are keen for traders to become AEO traders.
- On 11th December Parliament will vote and they are unlikely to agree to the Prime Minister’s proposal. In any event, should the UK leave the EU in March 2019, there is likely to be a two-year implementation period that will help companies to adapt.
- There is lots of media hot air and polarised arguments and delegates were recommended to look at the detail to get an understanding of the issues.
Cross-Government Border Delivery Group, HM Government
The Cross-Government Border Delivery Group scrutinises plans, identifies interdependencies and ensures border function in all Brexit scenarios. The Group is concerned with security, flow of goods and people, revenue and protection – it engages with ministers to consult and feedback insights and viewpoints from businesses. The challenges that will occur in the eventuality of a no deal Brexit were discussed.
Top take-away points:
- The Border Delivery Group is helping traders in the event of ‘day one, no deal’.
145,000 VAT registered businesses have received letters from HMRC about this.
- ‘Technical notices’ ensures Her Majesty’s Government is prepared for all scenarios.
- The ‘Partnership Pack’ is a key document for smaller companies. It contains a lot of further detail on what a no deal Brexit would mean and supports intermediaries in communicating the impact of no deal. The pack adds to the detail in the technical notices and is frequently updated.
- In EU ports, such as Calais and Zeebrugge, there is more space in ports, so it may be easier to accommodate some of the infrastructure requirements. The Group is engaging with other EU member states on this, although information gathering is still underway.
If you would like to find out more about how the new CDS and Brexit will affect your business, please get in touch with firstname.lastname@example.org. We can also send you a copy of our guide: Brexit – what you need to know.