Official confidence in the implementation of a new electronic customs processing system has “collapsed”, adding to fears about the ability of the UK to cope with an expected surge of work when the UK leaves the European Union in 2019.
The Treasury Select Committee on Friday published correspondence between its chair, Andrew Tyrie, and Jim Harra, a director general at HM Revenue and Customs.
This shows that HMRC’s grading of progress in establishing the new system due to be introduced in 2019 – known as the Customs Declaration Services (CDS) – has declined from “on time” in November 2016 to “in doubt” in January 2017.
“In just 67 days, confidence in the successful implementation of the CDS – a project that HMRC itself describes as ‘business critical’ – has collapsed,” said Mr Tyrie.
“Customs is at the heart of the Brexit debate. It is part of the essential plumbing for international trade, and ensuring it continues to function smoothly post-Brexit has to be a priority for the Government.”
Mr Tyrie drew attention to HMRC estimates that it could be forced to deal with a five-fold increase in declarations when the UK leaves the EU.
“The consequences of this project failing, or even being delayed, could be serious,” he explained. “Much trade could be lost. The project, therefore, merits a high degree of scrutiny by Parliament.”
This follows the warning earlier this week from the chief executive of the port of Dover, Tim Waggott, of an “Armageddon scenario” on customs post-Brexit.
He referred to previous backlogs of HGVs into the port due to strikes in France.
“In 2015 we saw Operation Stack in place for an unprecedented 30-plus days,” Mr Waggott told the BBC. “We will see that every day of the year, in perpetuity, if we don’t get this situation sorted.”
In her Lancaster House speech in January, Theresa May confirmed that the UK would quit the EU Customs Union in order to be able to strike its own new trade deals with other countries.
But the Prime Minister also said that she wanted a “completely new customs agreement” with the EU in order to prevent a return to costly “rules of origin checks” on UK goods sent to the continent, our largest single export market.
Yet even if there was a new deal that prevented the need for such checks, trade experts have warned that there would still be considerably more waiting and disruption for UK lorries entering the EU since drivers would have to demonstrate to border officials that they were exempt.
On the UK-side, the current customs system is the Customs Handling of Import and Export Freight.
This is being replaced by the more advanced CDS, which is supposed to electronically process all customs declarations, as well as record trade and transport statistics.
CDS is supposed to be operational from January 2019, shortly ahead of the scheduled Brexit date in March 2019.
Mr Tyrie said that HMRC needed to demonstrate its contingency plans for if CDS is not delivered on time.Reuse content