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The future of customs

Technology is shaping what’s next in trade: What does this mean for businesses?

Imagine a world where traders are empowered to oversee exports and imports on their own terms — receiving full visibility into when and where their goods are at any given time. In a pre-Brexit landscape, this level of autonomy for businesses moving goods between the UK and EU was unnecessary, but now, as businesses across the UK face more pressures, new technology is answering and not a moment too soon.

The recap

Now the UK has left the European single market, many businesses are facing new challenges — including importing and exporting between Great Britain (GB) and the EU, where they are now are required to submit customs declarations. This not only adds an administrative burden, it also makes trading more complex.

Where do traders turn?

Many businesses are opting to pay a third party to take care of meeting customs and borders regulatory requirements - adding the declarations onto other services, such as logistics, or using a customs broker or agent. While that may be the perfect solution for some businesses, others begrudge the high costs and lack of transparency around customs processes. A common view is that outsourcing customs takes away the perceived pain of these new requirements, when in fact the liability often remains with the importer or exporter, and much of the information required to submit a declaration must be provided by the businesses regardless of who completes the declaration.

After leaving the single market in January 2021, we saw a significant increase in customs declarations. With new regulations in place, small and medium business owners who trade with the EU are feeling the pressure. Capacity within these businesses is often too limited to take on more admin, margins are squeezed, and there’s often less time to invest in upskilling teams on customs processes. At the same time, many businesses are being turned away from using intermediaries as the demand for agents exceeds availability. Facing these unique challenges, the market needs alternative customs options for SMBs to help them keep their goods moving while considering cost effectiveness and timeliness.

So, what’s the alternative?

Since 2015, HMRC has invested in upgrading its legacy customs system, CHIEF, to the new Customs Declaration Service (CDS) which aligns with international standards adopted by the EU and set by the World Customs Organisation. A phased transition from CHIEF to CDS is underway, and CDS is now open to process customs declarations. Previously, access and usage of CHIEF was limited to brokers or intermediaries with the correct licenses, or for businesses to implement specialist software that integrates with CHIEF. Now, CDS has created the opportunity for disruption to this model by digitising the service and making it accessible online. When paired with a new breed of intuitive software platforms, CDS enables traders to handle their own customs declarations, as well as the opportunity to embed the customs process into their existing supply chain.

This is a huge win for smaller businesses with less complex customs needs. It means using an intermediary could become a thing of the past. When inputting data directly to HMRC is made relatively simple, it’s only natural to wonder why these smaller traders should pay expensive third parties to process their customs.

Technology that removes the ‘middleman’ allows traders to take control of customs declarations, but it also has a key obstacle to overcome: how do you make the customs experience simple enough to use for those who aren’t trained customs brokers?

While previously, traders’ only option was training to become an expert, now, they can complete a customs declaration using digital platforms that are intuitive and streamlined enough to guide a user through the process. This kind of groundbreaking technology - to put the power in the traders’ hands - could disrupt the traditional customs broker model for smaller businesses.

What could the future hold?

Beyond customs declarations, where could this technology take us next? Could this new technology create more opportunities for traders to take control? If data sharing between the trader and HMRC is made seamless, the next step is to further digitise and data-share across fragmented third parties - such as hauliers, logistics providers, storage facilities and government, and across multiple customs authorities. Once this complex network can easily share data in real-time, trading across the border can become cheaper, we can cut out unnecessary paperwork, customs compliance may increase, and ultimately, we can reduce the delays of goods moving. Empowering businesses to take full control of their customs declarations could change importing and exporting as we know it.
Information correct at publication date 21.02.2022
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.

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