NCTS4 vs NCTS5 - What Traders Need to Know Before November 2023

  • Director of Customer's Success

The New Computerized Transit System (NCTS) has been a vital tool for companies engaged in international trade since its introduction in the late 1980s. Over the years, the system has undergone various updates and improvements, including the most recent upgrade from NCTS 4 to NCTS 5.

All member countries of the Common Transit Convention (CTC) are required to transfer to New Computerised Transit System Phase 5 (NCTS5) by 30 November 2023.

NCTS 4 and NCTS 5 are both designed to facilitate the movement of goods across borders, with a focus on simplifying customs procedures and ensuring compliance with relevant regulations. However, there are several key differences between the two systems that are worth exploring.

One of the most significant differences between NCTS 4 and NCTS 5 is the level of automation. NCTS 4 relied heavily on manual input. This process was time-consuming and prone to errors, leading to delays and additional costs.

In contrast, NCTS 5 is fully automated, with all necessary data entered electronically. This streamlines the process and minimises the risk of errors. With the introduction of a digital Transit Accompanying Document (TAD) the paper document does not need to be carried with the goods. 

Another key difference is the level of security. NCTS 5 uses state-of-the-art encryption technology to protect the data that is transmitted between companies and customs officials. This ensures that sensitive information is kept secure, which is particularly important in today’s data-driven world. In contrast, NCTS 4 relied on less secure methods of data transmission, which could potentially put companies at risk.

NCTS 5 also offers real-time tracking capabilities, which allow companies to monitor their shipments at every stage of the journey. This provides valuable data for supply chain management and helps to ensure that goods are delivered on time. NCTS 4 did not offer this functionality, meaning that companies had to rely on manual tracking methods.

Another difference between the two systems is their integration with other customs systems. NCTS 5 is fully integrated with other customs systems, making it easier for companies to do business across different jurisdictions. NCTS 4, on the other hand, was less integrated, which could create additional complications for companies engaging in cross-border trade.

iCustoms NCTS module supports both NCTS 4 and NCTS 5 versions.

5 Key benefits of NCTS

The new system is expected to provide a number of benefits to its users, including:

  • NCTS5 will offer new and improved features, such as the ability to amend pre-lodged declarations, which will allow users to avoid the need to cancel and re-submit their declarations.
  • The introduction of a digital Transit Accompanying Document (TAD) will eliminate the need for a physical paper document to be carried with the goods, making the process more efficient and environmentally friendly.
  • The new system is designed to offer an improved user experience, making it easier for declarants to submit their transit movements and interact with the system.
  • NCTS5 is expected to reduce the administrative burden associated with transit movements by streamlining the process and offering more automated features.
  • The CTC aims to harmonize customs procedures across member countries, making it easier for businesses to trade internationally. By complying with the CTC, NCTS5 is expected to contribute to this goal.

Overall, the implementation of NCTS5 is expected to provide significant benefits to businesses and individuals who use the system, making it easier and more efficient to conduct transit movements across borders.

Reach out to iCustoms team at info@icustoms.ai to learn more about the changes.

Frequently Asked Questions

How does the digital Transit Accompanying Document work in NCTS5, and what do hauliers need to present at offices of transit?

In NCTS5, the Transit Accompanying Document is generated electronically and contains a unique MRN barcode. Hauliers present this document digitally, either on a device or as a printed copy showing the MRN barcode, at each office of transit. Customs officers scan the MRN to retrieve the declaration data directly from the NCTS5 system. Consequently, paper documentation no longer needs to travel with the goods throughout the entire journey.

Can traders amend a transit declaration once goods are in transit under NCTS5?

Yes, but only before goods are released. NCTS5 allows principals to submit an amendment request prior to the IE029 release message being issued at the office of departure. However, once that release message is sent and goods are in transit, amendments are no longer possible through the system. In that case, traders must contact the office of departure directly to request an administrative cancellation if significant errors are identified.

What new NCTS5 message types does trader software need to support that were not required in NCTS4?

NCTS5 introduced several message types not present in NCTS4. Key additions include IE013 (Declaration Amendment), IE014 (Declaration Invalidation Request), IE028 (MRN Allocated), IE170 (Presentation Notification for Pre-Lodged Declaration), and IE182 (Incident Notification). Traders using direct NCTS5 access or third-party software must confirm their system handles the full IE message set, as unsupported message handlers cause declaration failures and transit delays at departure.

Does NCTS5 change how customs authorities monitor guarantee balances during transit movements?

Yes. NCTS5 integrates guarantee monitoring in real time, meaning customs authorities can block new transit movements automatically if the principal's guarantee ceiling is exceeded at the point of lodgement. Under NCTS4, this check was less automated and issues were often discovered retrospectively. As a result, businesses with high transit volumes need to actively manage their guarantee reference amounts to avoid unexpected rejections at the office of departure.

What happens to businesses still using NCTS4-only software after the November 2023 migration deadline?

Since 30 November 2023, HMRC and all Common Transit Convention member countries closed NCTS4 to new transit declarations. Any software that only supports NCTS4 will fail to submit new transit movements. Businesses in this position must upgrade to NCTS5-compliant software immediately, as there is no grace period. Without an upgrade, they cannot lodge transit declarations and goods cannot move under the Common Transit Convention across any participating country.

Does the NCTS5 migration affect transit movements passing through both the UK and EU, or only within one jurisdiction?

NCTS5 applies to all movements under the Common Transit Convention, which covers the UK, all 27 EU member states, Norway, Iceland, Liechtenstein, Switzerland, and several other participating countries. Therefore, any transit movement crossing between the UK and the EU must comply with NCTS5 at every office of transit in all jurisdictions involved. For example, a movement originating in the UK and transiting through France into Germany must meet NCTS5 requirements throughout.

How does NCTS5 handle incidents during transit, such as accidents or route diversions?

NCTS5 introduced a formal Incident Notification process using the IE182 message. If an incident occurs during transit, such as an accident, vehicle breakdown, or forced route diversion, the carrier or principal notifies the nearest customs authority. That authority records the incident electronically in NCTS5 and forwards the notification to the office of departure. This creates a traceable audit trail and prevents the incident from triggering an automatic non-discharge enquiry against the guarantee.

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