Important Information on the CDS Migration

The UK customs authority HMRC is closing its Customs Handling of Import and Export Freight (CHIEF) system on March 31, 2023. It is being replaced by the Customs Declaration Service (CDS) as the new UK’s single customs platform. All businesses managing UK customs declarations will need to declare goods using the Customs Declaration Service.

HMRC is managing the system replacement in two phases:

1. As of September 30, 2022, you will no longer be able to make import declarations using CHIEF.
2. As of March 31, 2023, you will no longer be able to make export declarations using CHIEF and the National Export System (NES).

The main differences between CHIEF and CDS can be found via the below link.

Customs Declaration Service Making an import declaration on CDS – GOV.UK

Warrant Group plan to migrate onto CDS from the 1st of October and have highlighted below key information that will be required to ensure that your import declarations can continue to be processed.

Following a review of the processes required to complete a CDS declaration we have outlined the following summary for CDS readiness. Much of the information required on an import declaration will not change but additional information is required, and we will need your assistance and feedback to supply any additional information that will be required on your import declaration.

DEFERMENT & GUARANTEE

If you have a deferment account which you wish Warrant Group to use for your import customs clearances, you will need to give access via a standing authority on your CDS Financial Dashboard via your Government Gateway Account.

A Customs Comprehensive Guarantee (CCG) reference number is also required on all declarations when a deferment account is being used. If you have a deferment account, we will also need your CCG number to update our records. You should have received CCG details including the reference number directly from HMRC when deferment authorisation was granted and whoever applied should have the information. This number should start with GBCGU followed by a 26-digit reference number.

You can also obtain this number by contacting the HMRC guarantee team at the following email address: customs-comprehensive-guarantee-team.ccto@hmrc.gov.uk

INCOTERMS

The terms of delivery has to be declared on a customs declaration for release to free circulation and in order to allow for the correct determination of the customs value of the imported goods.

The CDS declaration now requires that the incoterm declared shall be made up of two components:

• First Component: INCOTERM code
• Second Component: Location up to which the INCOTERMs apply.

For example:

Using UN/LOCODE:

• CIFGBTIL (Cost Insurance and Freight paid to Tilbury)
• FOBHKKWN (Free on Board at docks in Hong Kong)

A plain language description for the location may only be declared where no UN/LOCODE exists for the location.

Using plain language description:

• CIFGBChester

Additional information on Incoterms can be found on the following weblink:

International trade contracts and incoterms – GOV.UK

VALUATION METHOD

A Valuation Method must be completed on the declaration to indicate the valuation method used to calculate the value for Customs Duty.

There are currently 6 valuation methods that can be used:

• Valuation Method 1 – Transactional value
• Valuation Method 2 – Transactional value of identical goods
• Valuation Method 3 – Transactional value of similar goods
• Valuation Method 4 – The deductive method
• Valuation Method 5 – The computed value method
• Valuation Method 6 – The “Fallback” method

Additional information on Valuation Methods can be found on the following weblink:

Notice 252: valuation of imported goods for customs purposes, VAT and trade statistics – GOV.UK

VALUATION INDICATORS

Valuation indicators are only required for declarations using Valuation Method 1 – the transaction value of the goods otherwise, they should be left blank. Valuation indicators are a 4 digit code, representing the answers to the 4 questions – as listed below.

The code comprises four digits, each of which being either a ‘0’ or a ‘1’:

• Enter a ‘1’ if the indicator affects the customs value.
• Enter a ‘0’ if the indicator does not affect the customs value.

Each ‘1’ or ‘0’ digit reflects whether or not a valuation indicator has an impact on the Customs Value of the goods concerned (for example, they affect the item price).

For all 4-digits, enter code:

• 1: where there is an effect.
• 0: where there is no effect.

• First Digit – A price influence as a result of a Party Relationship between the buyer and seller.
• Second Digit – Restrictions as to the disposal or use of the goods by the buyer in accordance with Article 70(3)(a) of the Code.
• Third Digit – The sale or price is subject to some condition or consideration in accordance with Article 70(3)(b) of the Code.
• Fourth Digit – The sale is subject to an arrangement under which part of the proceeds of any subsequent resale, disposal or use accrues directly or indirectly to the seller.

For example, if the answer to the first question above is yes, but the answer to the other questions is no, then the code to declare would be 1000.

Information on valuation can be found at HMRC weblink below:

Notice 252: valuation of imported goods for customs purposes, VAT and trade statistics – GOV.UK

NATURE OF TRANSACTION

CDS now requires us to declare the nature of transaction. The Nature of Transaction code is used to indicate the type of transaction, which is being declared, for example normal sales or acquisitions, goods sent for processing or repair, or free of charge goods. The code normally has one digit and a zero. However, a second digit can be used on certain occasions and although use of this second digit is not mandatory, it can very often help businesses in reconciling their accounts, avoiding discrepancies which might result in enquiries from HMRC.

Additional information on Nature of Transaction can be found on the following weblink:

DE 8/5 Nature of Transaction (Box 24: Nature of Transaction) – GOV.UK

LICENCES AND IMPORT CONTROLS

Previously HMRC allowed for license and import control waivers to be claimed on many commodity codes using a specific override code in Box 44 of the C88. HMRC have introduced a similar code to be used on CDS entries until 30th September 2023. However, this waiver does not cover as many HS codes on CDS as previously permitted on CHIEF. Therefore, we may require a positive statement or additional documents depending on the goods being imported.

We will contact you if this is required but please also check the HS codes you use on imports via the below link:

Trade Tariff: look up commodity codes, duty and VAT rates – GOV.UK

COMMERCIAL DOCUMENTS / INVOICES

To ensure that we can continue to process import declaration quickly on the new CDS system we recommend that the following information is available on your commercial documents.

• Consignor name, address, EORI Number (if known)
• Consignee name, address, GB EORI Number
• HS Code
• Product Description
• Gross & Net Weight
• Value of goods with currency
• Country of origin
• Number and type of packs
• Incoterms & location to which the incoterm applies
• If claiming EU duty preference, then a duty preference statement should be shown. For goods over the value of EUR6,000 the exporters REX number must be shown.