Posted: Mon 6th Dec 2021
New rules introduced by the UK government on 1 January 2022 mean you now need to submit customs declarations to HMRC when moving goods between the UK and the EU.
A customs declaration is a legal document that provides details of goods that are being imported or exported. Under the new rules, you now need to lodge a declaration with HM Revenue & Customs (HMRC) whenever you're importing goods from the EU to the UK, or exporting goods from the UK to the EU.
Below, we look at what customs declarations are used for, what information they contain and how they work. We also explain how and when you submit them.
Note: This blog is designed to give a general summary of customs controls changes for businesses trading between the UK and EU. It isn't specific to any one type of goods or business scenario.
A customs declaration is a document used when goods are traded or transported between countries. If you're bringing goods into the UK from the EU, or sending goods from the UK to an EU country, you'll need to lodge a customs declaration with HMRC.
Effectively, a declaration tells HMRC about:
the nature of the goods that are crossing international borders
how they're being transported
whether any safety or security controls apply (for example, licences or quotas)
whether any taxes are due (for example, import duty, import VAT, excise duties)
The customs declaration has a number of 'data elements' that you must complete for HMRC to accept it. These include the following:
Commodity code: Used to classify imported or exported goods. Having the correct code helps make sure you're keeping to customs rules and paying the right taxes and duties. It also indicates whether any licences are needed. You can search for commodity codes on the government's Trade Tariff website.
Information about goods and their journey:
The goods' origin
The mode of transport used to move the goods
Where the goods are being dispatched from
Where the goods will arrive
Valuation: This must be correct, since the value of your goods often acts as a basis for calculating customs duty.
Consignee: The party receiving the goods
Consignor: The party exporting the goods
This isn't a full list – there are many more data elements in a customs declaration.
Before you can trade (or continue to trade) with the EU, you must do the following.
At the time of writing, many customs declaration are submitted using the Customs Handling of Import and Export Freight (CHIEF) system. CHIEF is the government's computer system for recording the movement of goods by land, air and sea, and has been in place since the 1980s.
However, CHIEF is set to be discontinued for imports from 1 October 2022 and for exports from 1 April 2023. It will be replaced fully by the new digital Customs Declaration Service (CDS), which is already up and running. CDS will be the only platform used for submitting customs declarations in the future.
CDS is very useful in that it stores much of your import and export documents online, for easy access. This includes your:
import VAT certificates (C79) – statements of import VAT you've paid
management support system data – a record of all imports and exports your business has made
You won't be able to trade goods between the UK and EU without an Economic Operators Registration and Identification (EORI) number that starts with 'GB'. An EORI number is a common reference number that's valid throughout the EU and used whenever you have dealings with customs authorities in any of the EU member states.
You might already have an EORI number. However, if it doesn't begin with the letters 'GB', you'll need to apply for one that does.
The rules are slightly different for Northern Ireland. If you move goods to or from Northern Ireland, you'll need an EORI number that starts with 'XI'. You must have applied for a GB EORI number before you can get an XI EORI number. Read more about the application process
You'll be asked for your EORI number when using CDS to make customs declarations.
To get an EORI number, your business will need to be established (have premises) in the UK. 'Premises' means either a registered office, a central headquarters or a permanent business establishment.
When applying for an EORI number, you'll also need to give:
your business start date and Standard Industrial Classification (SIC) code – check the Companies House register
your Government Gateway user ID and password
your VAT number and effective date of registration (if you're VAT registered)
your National Insurance number (if you're an individual or a sole trader)
However you choose to make a customs declaration when importing – that is, as a full declaration or simplified declaration (see When do I submit a customs declaration? below) – you'll need to pay customs duty at some point.
A duty deferment account is an account you hold with HMRC that works like a credit account. Every time you import goods, you can offset the customs duty and the import VAT you owe in the duty deferment account. Then, once a month, HMRC will recover the money. This benefits your cash flow as HMRC doesn't charge you the duty until the 15th day of the month after you've imported the goods.
Having a duty deferment account helps you plan more, and means you don't have to make customs duty payments on a daily basis. It's also a lot less burdensome in terms of admin.
Without a duty deferment account, you'll need to pay your customs duty by credit card at the border every time your goods cross.
You'll need to decide whether you're going to submit customs declarations yourself or use a third-party agent or intermediary.
There are software packages available that connect with HMRC's CDS system. You can obtain one of these packages and submit customs declarations yourself.
It's worth keeping in mind that this comes with a cost, particularly if your business budget is tight. Also, depending on the size of your business and the volume of goods you're trading, you might need to take on new staff as well.
The main benefit of submitting customs declarations in-house is that you're less reliant on third parties, meaning fewer fees to pay.
You might choose to have a third party or intermediary submit customs declarations on your behalf. In this situation, you would collate all of the information about the products you're importing, then pass it to the third party so they can submit declarations for you.
A third party might be a freight forwarder, customs agent or fast parcel operator. To work with a third party, you'll still need to provide the ID number and information about the goods you're importing.
Here are the key things to consider when deciding whether to use a third party:
Do you have all the necessary data to hand?
Can you afford the cost of using that third party?
Is your chosen third party actually available? (Since Brexit, a lot of those services with third parties are oversubscribed and quite difficult to use.)
Since customs rules changed, there are now only two ways to submit a customs declaration.
The most common method of submitting a customs declaration is at the time of import. This is known as a full declaration.
Usually, you should pre-lodge the declaration at least four hours before the goods get to the port of export. Once the declaration is accepted via CHIEF or CDS, the goods can be loaded onto the relevant cargo, transport and so on.
You'll pay customs duty and import VAT when you lodge that full declaration at the time of importing.
This process allows you to delay your full customs declaration and instead submit a simplified declaration (around seven to eight data elements) when your goods arrive at a UK port or airport. Once you've done that, you have up to the fourth working day of the following month to submit all of the extra information.
The main advantage of this method is that it gives you more time to pull all the necessary data, documents and invoices together, so you can go on to submit that full customs declaration. It's also beneficial from a cash-flow perspective, as it lets you delay paying customs duty as well.
Advice and information on how small businesses can successfully import, export and expand overseas, provided by Enterprise Nation in collaboration with Deloitte.
Disclaimer: This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.
Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom.
Deloitte LLP is the United Kingdom affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Learn more about our global network of member firms.
© 2021 Deloitte LLP. All rights reserved.