Timing of new customs declaration system could make a bad Brexit worse
Director | Tudor International Freight
Disruption for traders with the EU following any no-deal Brexit will be intensified by delays in introducing the UK’s new system for managing customs declarations.
This is because the key implementation period for replacing the Customs Handling of Import and Export Freight (CHIEF) system with the Customs Declaration Service (CDS) could now be coming at the worst possible time.
CHIEF was introduced about 25 years ago, to process customs declarations for all goods being shipped between the UK and non-EU countries. It is one of the world’s largest and most sophisticated systems of this type, but its weaknesses include that it can no longer be adapted easily to new requirements.
Although CHIEF’s replacement has been planned since before the Brexit referendum, delays in introducing CDS mean it is increasingly unlikely that transition to the new system will be complete by the time we are due to leave the EU on 29 March.
In addition to the operational challenges of adopting a very different platform, concerns for the UK’s international traders and the freight forwarders, like ourselves, that they employ include over CDS’s capacity. A no-deal Brexit would mean trade with EU countries having to be recorded on it from the date of the UK’s departure, which would lead to a massive increase in the number of import and export declarations a largely unproven system would have to handle.
Companies involved in trading with non-EU countries are already aware of the extensive backlogs that can arise at ports and airports when CHIEF goes down.
Any such problems would, of course, compound the new import and export tariffs and other issues a no-deal Brexit would generate for the UK’s EU traders.
HMRC originally intended that CDS would be delivered in three phases, being ready for imports last November and exports this month. CHIEF, which would continue to run for a time to aid the transition, would then be wound down.
The first release of CDS went live, as planned, last August. However late last year HMRC said availability of full import functionality was being postponed until “after Christmas”. It also emerged that a new electronic tariff, needed for the databases software firms are producing, would be published substantially later than envisaged.
I want to stress that Tudor International Freight still sees the introduction of CDS in principle as important and beneficial.
CDS, which will be accessed through a Government Gateway account, will offer several new and existing services in one place. These include the UK’s traders and forwarders being able to view previous export and import data on pre-defined reports, check tariffs and apply for new authorisations and simplifications. In addition, useful online help will include self-service tools, guides and checklists.
But traders and forwarders will also have to enter some additional details not required by CHIEF into CDS, including an audit trail of previous document IDs, additional party types - such as buyers and sellers - and potentially additional commercial references or tracking numbers too.
Numerous additional differences between using CHIEF and CDS include over location of goods identifications, warehouse-type code lists and the way customs procedures are quoted.
Overall, the possibility of the main CDS implementation period now coinciding with a no-deal Brexit - the chances of which have increased in recent weeks - threatens to make a bad situation even worse for the UK’s EU traders and their forwarders.
Posted on: January 17th 2019