CDS - Payment Methods

The Customs Declaration Service has introduced new payment methods to pay for your import duties and taxes, and have removed some existing ones that you may have used previously on CHIEF. ACT have explained them below and how each of them affect your shipments.

There are now multiple possible methods of payment for paying for your import duties and taxes upon import.


ACT have received various questions about what they are, how they work and what is best for each situation so we have outlined our experience below.


 

Postponed VAT Accounting (PVA)

https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return


What can this be used to pay for? VAT

Do I need to register to CDS to use this? No, but you will not be able to get your VAT statements if you are not registered.

Do I need to authorise ACT to use my account? No

Can I use ACT's account? No

Which parties can have an account? Importer


By far the most effective way of paying for your import VAT. PVA allows your goods to cross the border without a payment needing to be made in advance.


Our experience: Seamless. It allows for a smooth process with no delays to cargo entering the UK.


Duty Deferment Account (DDA)

https://www.gov.uk/guidance/apply-for-an-account-to-defer-duty-payments-when-you-import-or-release-goods-into-great-britain


What can this be used to pay for? VAT & Duties

Do I need to register to CDS to use this? Yes

Do I need to authorise ACT to use my account? Yes

Can I use ACT's account? Yes, at a cost of +3% or £10, whichever is higher.

Which parties can have an account? Importer, declarant, haulier


A DDA is one of the easiest way to pay for your import duty costs as it allows your goods to cross the border and enter the UK without payment needing to be made either in advance, or upon arrival. As an example, you may have a £30,000 limit in your account, and then any import you do will be charged to this limit as the truck arrives and you will pay this amount back to HMRC on a direct debit basis.


Our experience: The best of the rest. If an importer has a deferment account and has authorised us to use it correctly, the process is as smooth as anything with no delays.


Cash Account

https://www.gov.uk/guidance/use-a-cash-account-for-cds-declarations

What can this be used to pay for? VAT & Duties

Do I need to register to CDS to use this? Yes - it is automatically given to everyone who registers to CDS

Do I need to authorise ACT to use my account? Yes

Can I use ACT's account? Yes, at a cost of +3% or £10, whichever is higher.

Which parties can have an account? Importer, declarant, haulier


A cash account works similar to a bank account in that you pay money in to the account, and then as entries arrive in the UK, it is then charged to your account and the funds are taken. The account works on a first come first served basis, which means if you have four entries due to be paid for using your cash account, whichever arrives first will be charged first. If this uses up all of the funds in the account, you will have to top up your account before the goods can be cleared to leave the port.


Our experience: Slow. Due to the first come first served basis, an importer has to be well prepared to have funds in their account for all upcoming imports. This is because making a payment to your cash account and having HMRC allocate it can take days to happen which means goods and drivers are sat at the port waiting for banks to update, so if it happens on a Friday, it means no movement until Tuesday/Wednesday sometimes.


Immediate Payment

https://www.gov.uk/guidance/pay-for-imports-declared-using-the-customs-declaration-service

What can this be used to pay for? VAT & Duties

Do I need to register to CDS to use this? No

Do I need to authorise ACT to use my account? No, there is no account necessary when making an immediate payment

Can I use ACT's account? N/A

Which parties can have an account? No account required


It's great that anyone in the chain can now make the import duties/taxes payment (importer/exporter/declarant/haulier), but it's not without its downsides. The biggest being that the payment reference number that is needed when making the payment isn't generated until the driver arrives in the UK. This leads to delays with them sat at Inland Border Facilities until payment is made and allocated to the import entry. As an example - If this happens on a Friday evening, we can send you the payment reference but if your accounts team have gone home for the weekend it can mean the driver is sat there until Monday morning before anything starts to happen behind the scenes which is another slow process with delays.


Our experience: Every shipment which uses the immediate payment method is going to be delayed and not allowed to proceed to delivery point until the payment is made. The unfortunate thing is, that process cannot begin until the shipment arrives in the UK when we are provided with the payment reference number. It's supposed to be quicker, but causes a lot of delays to drivers being able to move.

 

Overall our experience says that the tried and tested method of PVA for your VAT payments and a deferment account for your Duty payments seem to be the best way to keep goods moving with minimal delays, but the choice is down to the importer of the goods to consider the options and decide what is best for them.


As always, ACT are on hand to keep you updated with any changes in the industry and to help you keep your goods moving freely. Contact us today should you have any questions.


enquiries@act-forwarding.com +44 01304 273652