Many businesses trust that their customs declarations are accurate until an audit reveals discrepancies between HMRC’s records and their commercial records. This can immediately put you on the defensive during an audit and potentially open your business up to additional duty demands, penalties, fines and additional scrutiny.  

Why Does CDS Data Matter? 

HMRC uses CDS data to monitor compliance, detect irregularities, and assess risk. This data is the sum of all declarations submitted and accepted into the Customs Declaration System (CDS).  Businesses risk being caught off guard if they wait for an audit to review their customs records. The good news is that HMRC allows traders to subscribe to their CDS data for just £20 per month, providing an opportunity to analyse and address potential compliance issues before HMRC intervenes. 

Whilst CDS data is an excellent tool for audit and control, it can also be a powerful tool for spotting efficiency gains and reducing sales costs.  

Accessing and interpreting CDS data allows businesses to: 

  • Identify errors that may lead to underpayments or overpayments of duty.
  • Verify the correct application of customs reliefs to avoid non-compliance risks.
  • Ensure that customs brokers and agents are acting in line with expectations.
  • Ensure all transactions made in their name are theirs. 
  • Confirm that goods are being moved in line with their commercial records.  

Critical Focus Points to Monitor in CDS Data

1.  Are Duty Reliefs Being Applied Correctly?

Businesses often rely on duty relief schemes such as Inward Processing (IP), Outward Processing (OP), and Returned Goods Relief (RGR).  

What to check: 

  • Compare Customs Procedure Code (CPC) are in line with authorisations approved by HMRC. 
  • Ensure goods meet the conditions of the relief claimed (e.g., proper documentation for re-imported goods under RGR).
  • Review the volume of transactions benefiting from reliefs and assess compliance risk and savings made.

3. Are Customs Values Accurate?

Most customs duties are calculated as a percentage of the customs value. Customs value discrepancies often arise due to inconsistent treatment of freight costs, insurance, and other additions to the transaction value. 

What to check: 

  • Compare the inclusion/exclusion of freight costs across different suppliers. 
  • Verify that declared values match commercial invoices and Incoterms. 
  • Identify any patterns of currency discrepancies that may indicate incorrect conversions. 

5. What Are Your MOST/LEAST Used Commodity Codes?

A review of frequently used commodity codes helps businesses ensure they are classified correctly and consistently applied. 

What to check: 

  • Identify top 10-20 most used commodity codes. 
  • Conduct sample classification checks to verify accuracy. 
  • Ensure historical Binding Tariff Information (BTIs) and ATaRs are still valid. 
  • Identify the least used codes and sanity check, e.g. if you are a clothing business, and you have a box of bananas, there is probably an issue.  

7. Have Past Audit Issues Been Resolved? 

HMRC expects businesses to address and rectify past audit findings. If previously identified issues persist, it could lead to increased scrutiny and penalties. 

What to check: 

  • Compare past audit reports and HMRC correspondence with current CDS data. 
  • Ensure identified risks have been corrected. 
  • Look for recurring errors that require process improvements. 

2.  Are You Working Effectively with Your Customs Brokers? 

A high number of customs brokers handling declarations can indicate inconsistent processes and potential compliance risks. Different brokers may apply varying classifications, valuation methods, or duty reliefs, leading to discrepancies in customs records. 

What to check: 

  • Assess the number of brokers used and identify patterns in their declarations. 
  • Look for error rates across all brokers and benchmark them against each other.  
  • Evaluate whether centralising customs management could improve compliance.

4. Is Returned Goods Relief (RGR) Properly Controlled?

RGR allows businesses to re-import goods without paying duty, but many companies fail to maintain proper documentation to prove the original export. 

What to check: 

  • Ensure export records are available and match re-import declarations. 
  • Identify instances where RGR is claimed but export references are missing. 
  • Establish a robust tracking system to link exports with re-imports. 

6. Are You Controlling Your Use of Free Trade Agreements?

Many businesses use Free Trade Agreements (FTAs) but fail to ensure that the conditions for preferential treatment are met. 

What to check: 

  • Assess the value of duty savings from FTAs. 
  • Confirm that supplier declarations and origin documentation support preferential claims. 
  • Identify transactions where preference was not used but could have been. 
Australasian businessman working on laptop outside

CDS Data: Simplifying the Complex  

While CDS data provides valuable insights, it can be overwhelming for those unfamiliar with customs processes. The raw data from HMRC is often unstructured and difficult to interpret without specialist knowledge. It includes large volumes of transactional details that require careful analysis to uncover meaningful insights. 

Analytical tools like Barbourne Brook’s CAT360 can enrich CDS data with multiple sources, such as currency exchange rates, Free Trade Agreements, and the UK Tariff, to bridge this gap.  

CAT360 applies the same compliance checks that our customs consultants would manually perform, providing businesses with clear, actionable reports. This enables companies to identify discrepancies, monitor compliance risks, and gain oversight of their entire customs landscape without requiring deep technical expertise. 

For those with deep technical expertise, it saves days of work trawling through lines of data and spreadsheets.  

Next Steps 

We understand that every business has unique customs challenges. That’s why we offer live demonstrations using your own CDS data, allowing you to see precisely how CAT360 can help you take control of your customs compliance. 

If your business does not currently subscribe to CDS data, you can do so here. 

You can obtain four reports, the most commonly used being Import Item and Export Item. You can also request historical data and reports that are issued monthly going forward.  

If you’re interested in gaining greater visibility into your customs processes and seeing what HMRC sees, you can request a brochure or book a meeting with one of our Team to discuss.   

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