There was a previous article here The CHIEF system to be withdrawn, long live the CDS! which was about HMRC updating their customs/import software.
To summarise that previous article, HMRC use a computer system called CHIEF to record and track all imports/movement of goods. That system is being replaced with a new version called CDS and the previous article provided some detail about how the new CDS system differs from the previous CHIEF system.
The reason for revisiting that article, is that HMRC have started to write to VAT registered businesses where HMRC believe the business has previously imported goods into the UK (in reality, most businesses). The letter from HMRC is causing some confusion with taxpayers.
CDS (Customs Declaration Service)
For most businesses, enrolling to use CDS is required to enjoy the benefits of Postponed Import VAT Accounting (PIVA). By enrolling, the business can download the monthly postponed import VAT statements (MPIVS) and this allows the business to declare import VAT on the VAT return and saving the business significant amounts in terms of cashflow.
But that is often the extent of a business’s interaction with CDS.
HMRC have sent a letter to many businesses and the confusion is mainly the reader thinking they have to do something and/or there are changes in how they obtain their Postponed Import VAT Statements.
Action Point 1
If a business only enrolled for CDS to obtain the Postponed Import VAT statements, then there is no further action required. The business will continue to log onto their government gateway and download the monthly postponed import VAT statements as usual.
The business may want to double check with their regular freight agent/shipper/customs agent, to make sure that they are aware of the switch from CHIEF to CDS. One would hope they are aware; it is their business to move goods and make declarations at the border/customs, but from a business continuity perspective, always worth checking now with your chosen freight agent/shipper.
Action Point 2
If your business does make its own import declarations, then the switch from CHIEF to CDS is only a few months away.
To be clear, when importing goods from say an EU supplier, into the UK, the goods will simply be delivered to the business customer and the shipping agent/courier will present the appropriate paperwork (digitally nowadays) at the border, HMRC can then assess for any import duty/VAT, assign the VAT to an EORI number if supplier or the shipping agent/courier will pay and recharge back to the business customer. This is why often the business itself is not involved in the technical customs aspect of the delivery.
But some businesses do file their own import declarations, maybe they have significant imports on a daily basis and it is more cost effective for them to file the declarations than the shipping agent (the cost of shipping will usually include the admin costs, those admin costs can be avoided if the business customer files their own import declarations).
If your business files their own import declaration, then the previous AccountingWeb article is worth revisiting and to reach out to appropriate suppliers for training if required.
If your business receives this letter from HMRC, don’t ignore it. For the majority who don’t file their own import declarations, just make sure your preferred shipper/freight supplier are aware of the changes. If your business does file import declarations, then don’t leave it until it is too late, the new CDS filing system is different and will has a learning curve. further information from HMRC can be found in this link HMRC calls on businesses to get ready to move to customs IT platform over the summer
If you have questions on this article, or have questions relating to VAT, customs duty or Brexit related imports/exports, then do please visit our VAT services page and make contact VAT Accountants in London & Hertfordshire
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