The new Customs Declaration System CDS was due to replace HM Revenue & Customs ageing ‘CHIEF’ system in March 2019, but trade testing facilities that should have been made available at the end of July have still not been fully deployed, and HMRC have now admitted that the target launch date is no longer attainable.

The HMRC declaration processing system for imports and exports, ‘CHIEF’, which in 2017 was responsible for collecting £34bn in Duties and Taxes, has been in operation since 1994.

This old technology is expensive and incompatible with the EU Customs data model, the UCC.

One cannot fail to note the irony that after 6 years of building a system to be compatible with the EU Customs Code, the UK is – supposedly – leaving the EU !

CDS will integrate with other Government Systems and you will be able to see declarations using the Government Gateway. If you don’t already have a Government Gateway ID you should start to apply for it now in readiness.

HMRC have been rolling our letters and emails to known traders, to make them aware of CDS, and encouraging them to prepare.

The planned CDS migration contained three launch phases, in August, November and a third early 2019.

Since December 2017 HMRC have been releasing trade test (TTMS) updates, so that freight trade software developers can test their applications in the new CDS environment.

Although the first launch, Release 1, went live on 14th August, only two low-volume traders were actually using it – and only for a tiny number of declarations each month, which is far less than anticipated and nowhere near enough to truly test CDS’ resilience.

We have been advised by our software partners that the TTMS trade tests, that run alongside the launch phases, have been “a complete debacle”, with continuing delays, performance issues and non-existent support from the HMRC development team. These ‘issues’ are contributing to TTMS roll-out delays, while the CDS Team re-structures and allocates additional resources in order to improve quality.

In a recent meeting with freight software providers HMRC acknowledged that “not everyone will be off CHIEF by the end of March” and “Imports will last on CHIEF as long as Exports”, which means that declarations will continue to be submitted to CHIEF well beyond the original target deadline of March 2019.

Furthermore, the CHIEF contract with Capgemini has recently been extended to 2020, and according to the National Audit Office, HMRC had spent almost £9 million on scaling up CHIEF for contingency, which suggests that CHIEF and CDS will operate in tandem, with non-inventory import declarations migrated to CDS and everything else on CHIEF until full migration is possible.

There is no suggestion that CDS problems will lead to paralysis of the UK’s international trade, but there is increased potential for problems, which may well result in delays and disruption.

Some of the differences between CHIEF and CDS are listed here:
• SAD box numbers disappear and are replaced by Data Element numbers. There are more Data Elements than SAD boxes and although there is a direct correlation between many of these, this is not always the case. There will be a total of 157 data elements, 78 used on import declarations and 65 on exports. In comparison CHIEF declarations only require 72 items of data.

• The UCC mandates a fully digitised service and there is no longer a requirement for either the printed C88 or E2 and therefore CDS will not issue these documents.. This will represent a culture shock to many traders, not least your record keeping. Prepare your procedures for not having any E2 HMRC document after implementation.

• The details of VAT and Duty payable will only be sent from CDS as part of the Clearance response message, rather than at Entry Acceptance as is currently the case under CHIEF. Therefore the Duty and VAT taken will only be known after actual Clearance.

• A number of parties named in the declaration need to be authorised, these include the Consignee, Warehouse, Deferment party, etc. The application process for authorisations remains unclear, we do not know if HMRC will automatically provide these details to existing Traders. We will need to be authorised by you to make a declaration on CDS. This can be a standing authority valid until withdrawn.

• Each Declaration can now have up to 999 Items, rather than the current 99.

• The 7-character CPC disappears and is replaced by a 4 character “Procedure” code, one per Item. The new Procedure code can be supplemented by up to 99 “Additional Procedure” codes.

• Shipping Terms and the Terms place have been added as new Data Elements.

• Valuation indicators – Determining the type of sale, or lease, or loan etc of the merchandise, identifying any relationship between buyer/seller that would influence price.

A lot of the new data elements will be known to us, but we will be seeking more transactional information from you to ensure we are declaring the correct information under CDS, and in the lead up time for any general static information.

In conclusion …. Changes to imports will probably be in Q2/2019 and for exports, Q4/2019 or Q1/2020.

NB: CDS was never designed to accommodate BREXIT, and therefore further delays to rollout could occur depending on the impact of how we exit the EU and the readiness of HMRC to accommodate the effect.