HMRC indicates CHIEF replacement will be delayed - what does this mean for businesses?

Legislation | | MIC Customs Solutions |

CHIEF may not be replaced until next year, but now is still a good time to get ready.

The UK's HM Revenue and Customs (HMRC) has indicated that implementation of the new Customs Declaration System (CDS) is likely to be delayed until at least next year.

Although a formal announcement has yet to be made, the governing body suggested CDS will be running in tandem with the existing Customs Handling of Import and Export Freight (CHIEF) system until at least 2021.

Dual operating rather than complete replacement

Dual operating should help to ensure the new infrastructure is fully developed, stable and tested and there are no teething problems when CHIEF is eventually replaced.

It had been anticipated that CDS would be adopted last year, or at least in time for Britain's exit from the European Union earlier in 2020, but businesses have seen the deadline continuing to be pushed back.

Now, the British International Freight Association (BIFA) has welcomed the apparent decision by HMRC to implement dual running, saying it is reassuring.

Director-general Robert Keen said: "HMRC appears intent on having IT systems and customs processes in place that will not compromise the integrity of the border, or the flow of international trade."

In fact, he added that he is more concerned about a recent speech by Michael Gove stating that importers and exporters will need to submit full customs declarations from December 31st 2020 onwards.

"There is insufficient infrastructure and information in place at present to support the lodgement of import safety and security checks. BIFA members regard this as the most significant customs-related issue to facilitating the flow of goods to and from the EU," Mr Keen commented.

The BIFA also wants to see clarification on whether postponed VAT accounting will be introduced for import consignments.

What is CDS?

So, what exactly is CDS and why is it to one day replace CHIEF? Essentially, CDS was developed from scratch to offer a new system for processing goods declarations, calculating the correct duty and taxes, and handling customs information electronically.

It is intended to bring customs processing into the 21st century, as CHIEF - although successful and relatively sophisticated - is now a quarter of a century old.

CHIEF is currently used to process declarations and facilitate the movement of goods internationally between the UK and other non-EU countries, so CDS will affect anyone making customs declarations for goods imported from or exported outside the EU.

It is hoped the new system will provide a modern, digital declaration service that is able to grow with future trade plans and ambitions and be scalable enough to cope with any alterations to declarations that may arise as a result of Brexit.

CDS will be accessed through via a Government Gateway account and will allow traders to view previous import and export data, check their tariffs and statements and apply for new authorisations.

Be prepared for CDS, starting now

Although there has apparently been a reprieve in terms of the transition period being pushed back, now is a good time for businesses to ensure they have the right software in place to be ready for CHIEF to be replaced.

It is also recommended that affected traders should familiarise themselves with CDS so they are ready for when it eventually is brought in as a sole operating system.

Fortunately, here at MIC, we are fully prepared for the move to CDS and will be ready on time in order to help our clients continue trading with no disruption and total customs compliance.

If you're at all concerned by CDS or simply want to see what we could do for you in terms of software solutions, please do not hesitate to drop us an email at [email protected].