Consultation outcome

The Future of Customs Declarations - summary of responses

Updated 7 December 2023

Background

HM Treasury (HMT) and HM Revenue and Customs (HMRC) published a Call for Evidence in June 2023 that sought views from businesses and the wider border industry on how customs declaration requirements can be streamlined and how technology can be used to make meeting these requirements as easy and cost effective as possible. HMT and HMRC would like to thank stakeholders for their detailed consideration of the issues that were explored in the publication. We are grateful for the thorough written responses that stakeholders provided as well as the views that they shared in engagement meetings. This summary of responses sets out the key insights and suggestions that stakeholders provided.

Overview of responses

The consultation period ran from 29 June 2023 to 8 September 2023, and during this time HMT and HMRC received 40 written responses and conducted 19 meetings and roundtable sessions, engaging with 66 stakeholders in total. As part of the Call for Evidence, respondents were asked introductory questions to help HMT and HMRC understand more about the nature of their business or organisation, the main interactions they have with the UK’s customs regime and their experience of this.

The responses received covered a wide range of perspectives from across the border industry. Responses were split relatively evenly between intermediaries who complete declarations on behalf of traders of all sizes, businesses with differing levels of experience trading goods internationally, and from trade associations representing members in key import and export-focused sectors. Of those who provided written responses, 28% were intermediaries, 25% were trade associations and 18% were traders. We also heard from software providers and other government departments who engage with the customs declarations process.

Intermediaries who responded were relatively evenly split between those defined as micro or small businesses and those defined as medium-sized or large. Most intermediary businesses that responded were established prior to EU Exit.

The traders that responded directly to the Call for Evidence were spread across a variety of industries including food, retail, pharmaceuticals, and consumer goods. Most traders who provided written responses were classified as large businesses, employing over 250 people. To ensure responses were as representative as possible of border industry we also actively engaged with small to medium sized businesses, including a roundtable with businesses classified as small, employing less than 50 people.

We also received several responses from trade associations representing traders of all sizes from a variety of industries including the automotive sector, the meat trade, aerospace and defence and hospitality and events. Membership size varied significantly, ranging from 30 up to 1600 members.

For traders who completed declarations themselves, the time spent completing a declaration ranged from 5 minutes to 2 hours, depending on the size of the business, their expertise, complexity of the declaration, and level of automation provided by software. Some respondents noted that submitting declarations to the UK was less burdensome than other jurisdictions due to fewer data requirements. However, common challenges reported by traders, included incorrect information on shipping paperwork provided by suppliers, such as incorrect Exporter ID (EORI) numbers or shipping paperwork not being delivered alongside goods. For missing or incorrect information, respondents noted that it could take several days to receive this information which would extend the time taken to submit a declaration.

Customs software developers provide solutions which can simplify the customs declaration process through automating data entry, pre-populating forms, re-using previous data and running compliance checks. Traders who have purchased software which completes declarations directly onto HMRC systems including Customs Declaration Service (CDS) noted that automation made meeting requirements easier. Software was chosen according to its functionality, cost effectiveness and compatibility with existing systems. Small businesses appeared to have differing approaches to the use of software, with one respondent flagging that they were unlikely to purchase software to complete declarations in house and instead were more likely to outsource completion of declarations to an intermediary. Another small trader reported that they could not afford to outsource and had to complete declarations manually themselves.

In comparison to traders, the majority of intermediaries reported that straightforward declarations take around 10-30 minutes to complete. More complex declarations with a greater number of commodity codes or incomplete or incorrect data provided by clients could take up to 2 hours. Both traders and intermediaries described the challenges of obtaining information from different actors, such as clients, suppliers, hauliers, and shippers.

Summary of responses - streamlining customs declarations

Examining declarations datasets

We asked respondents a series of questions regarding declaration datasets, including the benefits or burdens of providing some data elements. We also asked whether they had a preference to remove or make optional the completion of data elements they find burdensome. Overall, we found strong appetite amongst respondents for the government to simplify declaration requirements, which would reduce administrative burdens.

Most respondents wanted HMRC to work collaboratively with industry to implement any changes to customs declaration datasets.

Where we refer to a particular percentage of respondents in the following sections this is based on the written responses to the Call for Evidence.

Trader burden

As part of this Call for Evidence, we tested 40 data elements to understand the burden they impose on, or benefit they provide for traders in providing the information. There were a variety of views, with some respondents reporting no problems meeting customs declaration requirements, whilst for others, providing the same data was challenging.

There were clear trends in respect of which data elements respondents found most burdensome to provide. Data elements related to the transportation of goods were commonly mentioned. Of those who commented on specific data elements, 60% of respondents flagged data element (DE) 7/9 Identity of Means of Transport on Arrival as burdensome and 79% considered DE 7/15 Nationality of Active Means of Transport to be burdensome too. It was mentioned that these data elements duplicate information required in Goods Vehicle Movement System (GVMS) and on Safety and Security declarations, where required. The information can also be challenging for declarants to obtain as they often rely on hauliers and freight forwarders to provide this information, which can increase time taken to complete the declaration. Furthermore, respondents flagged that if the means of transport is unknown at the time of submitting the declaration, or changes after submission, it is difficult to make changes to the declaration. Others noted that they did not understand why this information would be required.

Data elements related to the identification of goods, such as DE 6/11 Shipping Marks and DE 6/9 Types of Packages, were also considered burdensome by respondents since they are not always included in the commercial paperwork they receive, which means traders must physically check the packages to find and input the information. 65% of respondents who answered these questions considered DE 6/11 burdensome and 44% ranked DE 6/9 as burdensome.

The two data elements related to customs offices were also seen as difficult to provide for traders, as information such as DE 5/26, Customs Office of Presentation, may change at short notice.

Making data elements optional or removing

A range of respondents across all sectors welcomed making completion optional or removing a majority of the data elements we enquired about, as this would expedite the declaration process. However, concerns were noted by some intermediaries that the removal of certain data elements could negatively impact the accuracy of declaring goods, which could cause issues with destination authorities when exporting goods.

Stakeholders offered ideas on how to achieve simplifications with less burden to businesses. Several respondents suggested that the simplest way to achieve a change would be to make the completion of data elements optional before eventually removing them (if desired) to allow time for updates to be made to software, whether internally by traders themselves or by software providers. Keeping data elements as optional could also allow stakeholders to use the data for internal audit, general customs compliance, or record keeping purposes, while removing it as a legal requirement.

Respondents noted that any modifications to the customs declarations dataset would require changes to systems and processes, but that it was difficult to estimate the time and effort required for these changes before decisions were taken and communicated. Some respondents suggested minor modifications could be implemented within weeks and may not incur significant costs but estimated that more significant changes could require substantial development and that implementing these changes could take anywhere between 6 and 18 months. Some respondents indicated reluctance towards simplification, flagging that simplifications would need to be substantial enough to justify updating their system.

38% of respondents provided an answer to the question regarding the impact of removing data elements from the supplementary declaration but retaining on the full declaration. None of these respondents said that it would have a negative impact if this change was made. A majority of those said that they support removing data elements from the supplementary declaration as they would be able to process shipments via Simplified Customs Declaration Processes (SCDP) at a faster rate.

Specific data elements

There was no clear pattern as to which respondents complete the existing optional data elements, DE 2/4 Reference Number, DE 3/37 Additional Supply Chain Actor(s) Identification Number and DE 4/11 Total Amount Invoiced. Respondents that do complete these optional data elements noted it was beneficial for their business, particularly as an error-checking tool.

65% of respondents answered the question about providing seller and buyer data elements on import declarations, with many noting that providing these elements can be challenging.

65% of respondents answered the question relating to Gross and Net Mass, with a relatively even split as to those who find it easy to accurately provide DE 6/5 Gross Mass and DE 6/1 Net Mass and those who reported using one figure to approximate the other. Respondents that found it simple to provide both data elements flagged that this information is readily available on their shipping documents and inventory systems. However, for those that approximate one figure from the other, which was particularly common with intermediaries, the difficulty in providing precise figures stems from paperwork from suppliers not stating this information clearly.

Respondents rarely made use of the option to provide actor information as either name or identification (ID) number. Respondents noted that the ID data elements, DE 3/2 Exporter ID number (on import declarations) and DE 3/10 Consignee ID number (on export declarations), are rarely used as they do not provide any additional benefits to respondents. Respondents more frequently use DE 3/19 Representative Name and Address and DE 3/17 Declarant Name and Address. Several respondents highlighted the importance of DE 3/19 for their record keeping. For those respondents that use SCDP, DE 3/17 is often provided on a regular basis as respondents have the information readily available.

Of the 20% of respondents who move chemicals, they mostly do not provide DE 6/13 CUS Code for Chemicals, as it is not mandatory. It was suggested that the tariff guidance for this, and other, data elements could benefit from being updated to clarify the requirements.

Changes to supplementary declaration aggregation

Only 25% of respondents answered these questions, with the majority reporting that they either did not use aggregation or used it very sparingly. Lack of SCDP authorisation, limited knowledge, and complexity were commonly cited reasons for not using aggregation. For those who were SCDP authorised, a few mentioned that they did not use aggregation because it was preferential to maintain a 1-to-1 relationship between declarations and movements so that faulty imports could be easily traced and for audit trail purposes.

Of those who did use aggregation, some said that it was beneficial for their processes, particularly for warehouse removal, coupled with Entry in the Declarant’s Records (EIDR) declarations, or when issuing an aggregated declaration to correct a series of mistakes on previous declarations. 

Respondents, including those who currently do not use aggregation, welcomed simplifications but did not provide any detail on specific changes that they would find beneficial. One respondent warned that any software changes would take a long time to implement.

Flexibility at header/item level

Of the 55% of respondents that answered the questions on flexibility, 50% told us that they currently take advantage of flexibility at header/item level, with the majority expressing a desire to expand flexibility to other data elements. Multiple respondents noted that the benefits of flexibility mainly fall on those completing the declarations (often intermediaries) and not traders directly. Benefits included saving time, reducing double entry of the same information, and simplifying datasets. Respondents mentioned that data elements relating to deferment and transport should be made more flexible due to double entry on CDS e.g., at present declarants are submitting the same information at item level multiple times.

Some respondents noted that care should be taken where extending flexibility as it could lead to errors being made. This was especially true of some data elements, such as DE 5/15 Country of Origin and DE 5/16 Country of Preferential Origin, where mistakes could lead to potential compliance issues arising.

Changes to grouping rules

50% of respondents did not answer the questions on grouping, and of those who did, less than half use grouping. It was mentioned that grouping is beneficial when businesses are importing various goods falling within different tariff subheadings. When dealing with them individually is burdensome it is simpler to pay the highest rate of duty if that costs less than the administrative costs of declaring each set of goods individually.

However, it was flagged that grouping can make it more difficult for traders to track specific goods or consignments for audit purposes, so respondents preferred to declare at line level for duty management purposes. Some intermediaries noted that they do not use grouping because they feel that traders and auditors may not understand the rules around using it.

Summary of responses – use of technology to support the completion of declarations

The aim of the technology chapter was to establish the role that technology can play in meeting current customs requirements by looking at solutions that assist the completion of declarations. For example, software that submits declarations directly on HMRC systems or simplifies the customs declaration process by automating data entry and pre-populating forms. Questions were asked on four key areas: availability of technology to support the completion of customs processes; product uptake (and use); benefits delivered by technology; and barriers to using technology.

Technology which supports the completion of declarations is available in a range of solutions accessible to all types and sizes of businesses. However, larger traders seem to make greater use of the available technology and therefore tend to achieve greater benefits. Smaller traders tend to face more barriers than larger traders when investing in technological solutions with many noting the considerable upfront and maintenance costs as predominant barriers.

The majority of respondents who use technological solutions have in-house software and systems which assist with streamlining declaration requirements, for example by simplifying access to necessary data such as commodity codes and by facilitating digitised data sharing. Most respondents also acknowledged that adopting technology increased the efficiency of their processes and reduced the time taken to carry out some of their declaration requirements.

Availability of technology

Overall respondents demonstrated strong awareness of technological solutions on offer supporting them in meeting customs declaration requirements. Available solutions range from data collection software to data generation and data sharing systems. The most prevalent examples included software that scans documents and automatically pre-populates declarations with the collected information, software that accurately identifies commodity and procedure codes based on previous activity and commercial trends, and systems that make data available digitally and in real-time to a range of actors in the supply chain.

Respondents reported that there are a number of technological solutions available in the market, however, many of these solutions seem to be adapted to suit specific business models and sizes. While software providers confirmed that bespoke tailoring of technological solutions to meet unique business models is possible, trade associations flagged that this can be expensive. As such, technological solutions seem to be more widely used by, and of benefit to, larger businesses because of affordability, return on investment and the nature of solutions available.

The most frequently requested area for improvement to available technological solutions was software that offered the ability of interacting with multiple government systems, such as with GVMS and CDS. 20% of respondents who suggested the need for improvements mentioned that it would be beneficial for solutions to also cater for additional declaration types (e.g., Transit and Safety and Security). Most respondents were confident that either new products would be created, or current products improved, to cater for these more specific applications.

Uptake and use of technology

More than 60% of respondents to this section reported that they use some form of technological solution, for example through software that automates the population of declarations, while the minority tend to complete most of their declarations in a more manually intensive process. Intermediaries and large businesses who complete their own declarations (in particular businesses in the perishables, automotive and pharmaceutical sectors) are the most likely to use technological solutions. Respondents predominantly use technological solutions that offer automation and document or data repository functionalities to simplify their process of completing and submitting their declarations. One of the reasons respondents noted for not using technology to complete declarations was because of outsourcing to customs agents and intermediaries.

Stakeholders that use technological solutions were asked to share the costs associated with doing so. Although many respondents did not disclose costs due to commercial sensitivities, most flagged that upfront and initial investment costs are significant, especially if using tailored solutions. Respondents also suggested that there are significant ongoing maintenance costs associated with technological solutions. However, respondents did also offer examples of cheaper and more accessible options, which predominantly cater to smaller businesses.

The majority of respondents were optimistic about seeing what emerging technologies have to offer in the future, for example solutions utilising Artificial Intelligence (AI) and Machine Learning (ML), while the minority were sceptical and raised some concerns around investing in non-traditional software. More specifically, from a process improvement perspective, respondents expect that in the future, technology will offer solutions that accommodate the automated creation of customs-specific data (e.g., commodity code generators) enabling an increasingly seamless and compliant declaration submission.

Benefit(s) of using technology

Most respondents agreed that technological solutions help businesses in completing their declarations and improves their experience of meeting their requirements. The main benefits from the use of these solutions included timesaving through standardisation, minimisation of errors while improving the accuracy of declarations and the ability to conduct commercial data analytics on their movements.

Some respondents also agreed that the automated processes of technological solutions help internal cost-savings per declaration which in turn allows businesses, in particular customs intermediaries, to offer competitive prices for their goods and services respectively. A few stakeholders mentioned supplementary commercial benefits, for example where solutions also offer supply chain tracking functionalities for a goods movement end-to-end journey.

In larger businesses there is some evidence to indicate that the use of technology may also mean fewer staff are required to complete declarations. Nonetheless, 20% of respondents noted that the benefits from the use of technology can frequently be outweighed by the large cost associated with the initial investment and ongoing maintenance of such solutions.

65% of intermediaries expressed that the use of technology contributes to their role or function to some extent. Most of these intermediaries agreed that technological solutions help their customers meet their declaration requirements. More specifically, respondents found that technological solutions offer a declaration process experience which involves less manually intensive means of collecting and sharing declaration-related data with various actors in the supply chain.

Potential barriers to using technology

25% of respondents agreed that cost, including both upfront investment and ongoing maintenance, is the most prevalent barrier to the uptake and use of technological solutions that support the completion of declarations. Some respondents reported that they are not willing to invest further in technology until they can fully appreciate the requirements of the longer-term customs border model. This included anticipating the delivery of the Single Trade Window and understanding what role Community System Providers will perform.

The majority of respondents also identified knowledge gaps, lack of training, data security and systems integration issues as factors which prevent businesses from investing in technological solutions. Software developers seemed aware of the range of barriers faced by potential users of their solutions and mentioned that they are developing simplified solutions that will address them. A few stakeholders mentioned that legacy systems act as a barrier in uptake of new technological solutions. Some find it difficult to rely solely on software without any manual intervention, especially when these solutions are not tailored to their business.

60% of respondents do not consider legal or policy issues as prominent barriers to the uptake and use of technological solutions. However, those that did consider these a barrier agreed that it is due to data protection and security concerns, in terms of data breaches and adherence with data protection regulations. There were also a few stakeholders that noted reluctance in the use of technological solutions due to concerns that automation functionalities could affect the correct allocation of liability in instances of error or non-compliance by other supply chain actors.

Summary of responses - further suggestions

Simplifying customs declarations

Respondents noted difficulty in providing data elements that were out of scope of this review, e.g., DE 2/3, Documents Produced, Certificates and Authorisations, Additional References and enquired around potential further education and guidance in this space. They welcomed further collaboration throughout the process of the review and suggested that continued engagement would support them in implementing any changes. Respondents suggested that any changes must be clearly communicated to exporting countries.

Availability of support

Respondents mentioned that there is scope to improve existing guidance. Suggestions included improved guidance to help declarants identify and resolve errors when CDS rejects declarations due to incorrect data elements. It was mentioned that tariff guidance for moving chemicals could be improved and mechanisms to help identify commodity codes and VAT relief related codes would simplify the process of submitting declarations. Respondents mentioned that the support available to all actors involved in the customs declaration process, such as shippers, should be improved to increase compliance.

The role of technology and innovation in the UK customs system

Respondents considered technological innovation as vital in ensuring an automated future, though noted that it should be governed by standards and uniformity. When looking to simplify declaration requirements respondents mentioned the need to reduce the number of interactions with government systems and improve government communication with businesses for ease of error resolution. A few stakeholders also suggested that any future use of technology will need to be coupled with support and guidance for traders to ensure they are able to make use of the technology.

Northern Ireland

Respondents flagged that the government should be conscious of the unique position of Northern Ireland and consider how any changes to customs declarations affect Northern Ireland’s economic arrangements.

Next steps

Government Response

Engagement with industry through the Call for Evidence has helped to identify which data elements impose the greatest administrative burden on businesses. Taking this into account alongside our need to deliver our key priorities at the border, the Government will simplify customs declarations for both imports and exports by reducing the information traders could have to provide by up to a quarter. These changes will benefit traders of all sizes. We will maintain an ongoing dialogue with industry to ensure we are delivering maximum trader benefits and can implement these changes in a way that supports traders. We will publish further details in due course.

We will continue to draw on the responses we received to the Call for Evidence to understand how we can further improve customs declarations requirements and improve guidance for stakeholders, especially with regards to data elements that traders found challenging to complete. Similarly, responses have furthered our understanding of how technology is currently used to support the completion of customs declarations and have also helped reinforce that technology has a wider role to play in the future. Alongside the evidence gathered from Government consultation on the Border Target Operating Model, and technology tests like those undertaken as part of the Ecosystem of Trust pilots, these insights will inform the design of HMRC and wider Government border transformation programs.

Annex A: list of stakeholders consulted

ADS Group Ltd	AI Dock	ALS Customs Services
ASDA	Association of International and Courier Express Services (AICES)	British Antique Dealers Association (BADA)
British International Freight Association (BIFA)	British Universities Finance Directors Group (BUFDG)	Brose
BT	Channel Ports	Customs & Freight
Cummins	Customs Management Limited	Customs Support
Deloitte	Descartes	Dixon Transport
Events Industry Alliance	Federation of Small Businesses (FSB)	Francis Clark LLP
Fujitsu	Gallaher Limited	GSK
Haleon	Helios Gallery Antiquities	HFS Customs
Hillier Hopkins LLP	Institute of Chartered Accountants in England and Wales (ICAEW)	Institute of Export and International Trade (IOE&IT)
International Meat Trade Association (IMTA)	Jaguar Land Rover	KlearNow
KPMG	Kuehne + Nagel	Livingston International Europe Limited
Mann & Son (London) Limited	Ministry of Defence (MoD)	Office for National Statistics (ONS)
Rolls Royce	Royal Mail Group	Society of Motor Manufacturers and Traders (SMMT)
The Duty Specialists	UK Chamber of Shipping	University of Warwick