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Container ship at Felixstowe | accountingweb | Subscribing to CDS (Customs Declaration Service) – Useful for Book-Keepers to know
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What bookkeepers need to know about CDS registration

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Businesses that occasionally import goods into the UK need to subscribe to the customs declaration service. Jason Croke has some handy tips for bookkeepers whose clients fall into this category.

24th May 2023
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When goods are imported into the UK, someone has to pay import VAT, and that is usually the customer or recipient.

There are two main ways that this import VAT is paid.

  1. The best route is postponed VAT accounting (PVA) as the customer can account for VAT on their VAT return. 
  2. The other route involves the courier or delivery company paying the import VAT to HMRC and then recharging this VAT back to the customer, plus an admin fee. The customer settles the VAT with the courier and waits for a C79 certificate to be issued, then the customer or importer can reclaim the VAT.

For businesses that regularly import goods, they will hopefully already be using PVA, but there are many businesses out there that may only import occasionally. 

The problem is that a courier or freight agent only needs the business customer’s economic operators registration and identification (EORI) number and can postpone the VAT at import. However, the customer may be unaware that the courier is doing this and the risk is a business could be incurring postponed VAT without even knowing about it. 

The business needs to subscribe to the customs declaration service (CDS ) and then enrol for postponed import VAT accounting, both via their government gateway.

Find the C79

A good bookkeeper should spot imports (zero-rated invoice from supplier) and ask where the C79 certificate is. If there is no C79, then the chances are the courier has assumed the customer wants to use PVA and there is a postponed VAT statement sitting on the client’s government gateway.

If the bookkeeper can see an invoice from the courier recharging the import VAT, then that confirms there must be a C79, since January 2023, most C79s are digital and can also be accessed from the same postponed import VAT screens on the government gateway. C79s allow input tax to be reclaimed on the imported goods.

Even if a trader only imports once or twice a year, it is still probably worth investing 15–20 minutes to set up CDS and PVA and this then avoids the hassle of C79 certificates and indeed, having to pay import VAT out physically before waiting to reclaim it on the next return.

Subscribing to CDS

I recommend bookkeepers consider subscribing to CDS and enrolling for PVA on the basis that their clients could be importing things and not declaring any VAT as they are unaware they even have postponed VAT. The client will expect a bookkeeper to be getting this correct.

For most traders, who can reclaim their VAT, not declaring postponed VAT does not create a VAT liability and so there are no penalties, but the business would still be non-compliant and may open the bookkeeper to accusations of not being thorough and so on.

Below is a guide on how to register for CDS. Once subscribed to CDS then you can access the postponed import VAT statements straightaway,  although sometimes HMRC can take up to 48 hours to grant access.

Questions you will be asked when subscribing to CDS

What is your EORI number? 

This will be the client’s VAT number with three zeros added to the end of it. So if the VAT number is 123456789, the EORI number would be GB123456789000.

Where is your organisation established?

This will be UK company, Channel Islands company or rest of the world.

What do you want to apply as?

The options are company, sole trader, individual, partnership, limited liability partnership or charity, pubic body or not for profit.

The last one is for structures like pension funds and trusts and unincorporated bodies such as small charities and clubs. 

What are your company details?

Put the name of the client, exactly as shown at Companies House or on the VAT certificate.

Include the unique taxpayer reference (UTR) for the applicant, but just the block of five digits and five digits (12345-67890). Ignore the first three digits and the slash (632/).

Date when the company was set up

Put this as per Companies House.

What is your company’s registered address?

Use the address as per Companies House first, and if that fails, try the address on the VAT certificate (which may be different).

Check your answers

All of the answers are matters of fact. However, if there are errors then it is usually the postcode or address that causes the problem. Also, check the client’s name is exactly as registered with Companies House. For example, if a company at Companies House is showing as ABC. Ltd (note the full stop) then if you answer as ABC Ltd (with no full stop) there will be a mismatch. So make sure the company name is exactly as Companies House – even if it is a typo.

Replies (3)

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By Hugo Fair
24th May 2023 16:10

You're surely not suggesting, Jason, that there's more to bookkeeping than reconciling invoices and bank transactions? Do you think HMRC are aware of this? :=)

Thanks (2)
VAT
By Jason Croke
26th May 2023 10:33

A book-keeper someone who is regularly looking after the same clients will sense that they've not seen a C79 or a recharge of VAT from DHL/Fedex and my article was aimed at those who know something is wrong but not sure what or how to resolve.

Where you have a book-keeping team who are not allocated a specific list of clients to look after or where the book-keeping is passed from a senior to a junior for training or just passed to whoever is available, we lose a bit of intimacy in regard knowing the client and that is where these things can get missed or not picked up.

I suspect there are thousands of traders out there oblivious to the fact they're importing stuff and the VAT has gone to the postponed account and nobody has picked up on that or done the in/out in boxes 1/4. For most it probably isn't an issue as no VAT loss , but ignoring the fact it might be VAT neutral, client is paying for us to do their book-keeping and if we're not picking up import VAT matters then client could have cause for complaint.

HMRC probably aren't even aware of this issue, they can barely understand basic stuff like replying to letters or emails in less than 6 months, so I think taxpayers are safe for a while, but if I were HMRC and had some resource, I'd be trawling the PVA statements of business that I think might be partially exempt (banks, opticians, etc) and would be worth a punt.

Thanks (1)
Replying to Jason Croke:
avatar
By Hugo Fair
26th May 2023 11:27

Wholeheartedly agree with all that ... and apologies for omitting to say that I found the article both easy to read and helpful.

My cumbersome attempt at sarcasm was intended to be a dig solely at HMRC's expense .. suggesting they seem to be unaware that there's more to bookkeeping than reconciling invoices and bank transactions (as per their enthusiasm for the 'simplification' to be wrought via use of cash basis and MTD).

Thanks (2)