Understanding what the new HMRC CDS service means for your business
HMRC's Custom's Declaration Service (CDS) platform becomes mandatory for importers from 30 September 2022.
For importers that use a customs agent, the key change to be aware of is the benefit of access to a Financial Dashboard in order to view financial information related to customs declarations that have been declared using your organisation's EORI number.
Traders are advised to:
1. Register for CDS using the government gateway account - and access a cash account number
2. View your customs financial accounts in the Customs Declaration Service to:
Add authority for Alinea Customs to use a duty deferment account, general guarantee or cash account
amend a standing authority
3. Log in to the CDS Financial Dashboard to view financial information related to customs declarations.
The new Financial Dashboard provides access to information concerning:
access to the Customs Declaration Service
access to import VAT and duty adjustment statements
access to postponed import VAT statement - statements are issued on the 6th of each month
access to copies of duty deferment statements
access to import VAT certificates
access to manage an email address
This new user-friendly interface enhances transparency for traders and customs declarations, in comparison to HMRC CHIEF, where this information was solely available through the monthly C79 statement posted to the registered user address, documents provided by the authorised customs agent, and the paid-for HMRC Management Support Service (MSS) providing information on annual import and export data.
Methods of Payment
The new CDS platform enables traders to make payment to HMRC using the following methods:
Immediate Payment
The Immediate Payment form can be used to pay a customs debt as an alternative to using a cash account, or duty deferment account. It requires the Customs Declaration Service Immediate (CDSI) 12 digit number associated with the transaction, and can be paid using this form: Pay for imports declared using the Customs Declaration Service - GOV.UK (www.gov.uk).
Cash Account
All importers that have subscribed to CDS are automatically provided with a cash account. Like a bank account, the cash account can have a balance allocated in advance of the import arrival, and the cash account noted on the customs declaration. To pay into a cash account, use the following link: Paying into your Customs Declaration Service cash account - GOV.UK (www.gov.uk).
The trader will require a CDSC payment reference number which can be located within the financial dashboard. It will begin with CDSC followed by an 11-digit cash account number. Paying via a funded cash account means that the customs declaration will immediately clear. Payments are usually credited within 2 hours.
Alternatively, traders can make a DDA transfer by Faster Payments, CHAPS or Bacs
If your account is in the UK
Sort code: 20 05 17
Account number: 23372545
Account name: HMRC Customs Duty Schemes
If your account is overseas
Bank identifier code (BIC): BARCGB22
Account number (IBAN): GB16BARC20051723372545
Account name: HMRC Customs Duty Schemes
How long it takes
Your payment will be allocated to your duty deferment balance:
by the next working day if you used Faster Payments (online or telephone banking) or CHAPS
within 3 working days if you used Bacs
instantly or within 2 hours if you approve a payment through your online bank account
Duty Deferment Account
The duty deferment account (DDA) operates in a similar method to a DDA linked to CHIEF, with a key difference being that it permits the account to be topped up in advance if the balance is close to its limit, whereas a DDA linked to CHIEF has a maximum guarantee limit. Whilst traders that have a DDA linked to CHIEF will automatically access a Duty Account Number (DAN) - they are required to set up a new direct debit.
To pay into a duty deferment account, use the following link: Top-up your duty deferment account using the Customs Declaration Service - GOV.UK (www.gov.uk)
The trader must use the CDSD payment reference number which will begin with CDSD followed by a 7-digit Deferment Account Number. Payments are usually credited within 2 hours.
Alternatively, traders can make a DDA transfer by Faster Payments, CHAPS or Bacs
If your account is in the UK
Sort code: 20 05 17
Account number: 23372545
Account name: HMRC Customs Duty Schemes
If your account is overseas
Bank identifier code (BIC): BARCGB22
Account number (IBAN): GB16BARC20051723372545
Account name: HMRC Customs Duty Schemes
How long it takes
Your payment will be allocated to your duty deferment balance:
by the next working day if you used Faster Payments (online or telephone banking) or CHAPS
within 3 working days if you used Bacs
instantly or within 2 hours if you approve a payment through your online bank account
The method of payment (MOP) declared on a customs declaration is final. Unlike CHIEF, customs agents are not permitted to amend the MOP therefore it is important to decide on the appropriate method in advance of raising an import declaration.
Customs Compliance
From a customs agent's perspective an increased data set is required concerning information related to each import including:
Incoterms - Incoterms are required as mandatory on each import declaration.
The Incoterms® rules are published by the International Chamber of Commerce and are world’s essential terms of trade for the international sale of goods.
Customs Valuation - in compliance with the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 - also known as the World Trade Organisation's Valuation Agreement, the customs agent is obliged to confirm with the importer information concerning the customs valuation method -particularly in relation to the use of method 1 - as follows:
a.) Party Relationship - is there a relationship between the buyer and the seller? For example is a branch transfer of goods occurring?
In accordance with Article 15, of the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, persons shall be deemed to be related only if:
(a) they are officers or directors of one another's businesses;
(b) they are legally recognized partners in business;
(c) they are employer and employee;
(d) any person directly or indirectly owns, controls or holds 5 per cent or more of the outstanding voting stock or shares of both of them;
(e) one of them directly or indirectly controls the other;
(f) both of them are directly or indirectly controlled by a third person;
(g) together they directly or indirectly control a third person; or
(h) they are members of the same family.
Note that a buyer-seller relationship does not necessarily prohibit the ability for transaction valuation method 1 to be used unless it has impacted the price, but HMRC are required to be informed since the introduction of CDS - and are likely to apply an increased level of due diligence when auditing related parties. Further information and tests for comparison purposes is available from HMRC Notice 252, Section 28.
b.) Buyer Restrictions - are there any restrictions upon import that impact the buyer's ability to place the goods on the commercial market of Great Britain and Northern Ireland?
In order to apply transaction valuation method 1, in accordance with Article 1 of Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, 22 December 1994, the agent must confirm with the importer, the following:
(a) that there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which:
(i) are imposed or required by law or by the public authorities in the country of importation;
(ii) limit the geographical area in which the goods may be resold; or
(iii) do not substantially affect the value of the goods.
Examples of restrictions which can be ignored:
an official licence is needed to trade in the imported goods
the goods can be sold only in the UK
the goods cannot be sold before a certain date, for example, cars which cannot be sold before the start of a model year
Further information is available from: HMRC Notice 252, Section 27.
c.) Conditions on Sale or Price - in accordance with Article 1 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, 22 December 1994, the customs agent must confirm whether there any conditions on the sale or the price of the goods that impact the final invoice value - for example - has a vertical restraint such as tying occurred?
Tying refers to situations where customers that purchase one product (the tying product) are required also to purchase another distinct product (the tied product) from the same supplier or someone designed by the latter.
Conditions on the sale or price could include:
the seller fixes the price of the imported goods on condition that you buy other goods in specified quantities
the price you pay for the imported goods depends upon the price you charge the seller for other goods
the price you pay for the imported goods depends upon an agreement you make with the seller, for example, you import semi-finished goods on the understanding that you’ll send a specified quantity of the finished goods to the seller
Further information is available from HMRC Notice 252, 27.1
d.) Proceeds of Sale/Use
If any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller, an adjustment must be made to the invoice to account for the seller's share of dividends for customs purposes, in accordance with Article 8 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, 22 December 1994. If at the time of importation the amount of profit is not known, a request release of the goods against a deposit or guarantee should be made.
Further information is available from: HMRC Notice 252, 3.15.
In order to remain compliant with HMRC's Customs Declaration Service (CDS) requirements, new and existing clients of Alinea Customs will be requested to complete a compliance questionnaire. For further information on how CDS may impact your business, please contact customs@alineacustoms.com.