Brexit: Failure to introduce new customs system by date of Britain's EU withdrawal would be 'catastrophic'

Westminster’s public accounts committee said the number of customs declarations which HMRC must process each year could increase almost five-fold – from 55m to 225m – after leaving the bloc

Ashley Cowburn
Political Correspondent
Tuesday 14 November 2017 10:29
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Failure to introduce new customs system in time for Brexit would be ‘catastrophic’

Failure to complete the introduction of a new customs system by Brexit in 2019 would be “catastrophic”, with the risk of huge disruption for businesses, massive queues at Dover and food being left to rot in trucks at the border, a parliamentary report has warned.

The stark warning from Westminster’s public accounts committee said the number of customs declarations which HM Revenue and Customs must process each year could increase almost five-fold – from 55m to 225m – after leaving the bloc.

Brexit Secretary David Davis has repeatedly boasted that the new hi-tech system – the Customs Declaration System (CDS) - will be in place by January 2019.

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But MPs on the committee warn that if the new infrastructure is not ready in time and there is no viable fall-back option, it could lead to a “huge disruption for businesses, with delays potentially causing massive queues at Dover and resulting in food being left to rot in trucks at the border".

They added: “This is a programme of national importance that could have a huge repetitional impact for the UK if it is not delivered successfully.”

Meg Hillier, who chairs the committee, said: “Failure to have a viable customs system in place before the UK's planned exit from the EU would wreak havoc for UK business, trade and our international reputation. Confidence would collapse amid the potentially catastrophic effects.”

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She added that HMRC is under “considerable pressure” to deliver the new customs infrastructure on time and claimed the new Customs Declaration Service does not yet have funding to increase its capacity and deal with the consequences of Brexit.

Ms Hillier continued: “This is deeply worrying. HMRC requires a relatively small sum to upgrade the current Chief (Customs Handling of Import and Export Freight) system - a move which would provide some peace of mind to traders, many of whom are still operating with limited information and in great uncertainty.

“HMRC tells us it is merely 'in conversation' over Chief upgrade costs when, on behalf of business and the British public, it should be banging on the doors of the Treasury.

“HMRC must press the case to secure this funding now and ensure that, if other plans fail, customs will be fit for purpose.”

Layla Moran, a Liberal Democrat MP who sits on the Public Accounts Committee, said the report exposes the “major threat” Brexit poses to ports, businesses and food supply.

“Thousands of businesses risk being left in the lurch because of the extreme Brexit Theresa May has chosen,” she added. “We were promised £350m for the NHS, instead ministers will have to spend millions setting up a new customs system to avoid chaos at our borders.”

The report comes after Jon Thompson, the chief executive of HMRC, highlighted the risk that CDS could “go off track”.

“I need to be transparent with you,” he told the same committee last month. “There are four significant risks with this programme.”

And he added: “I would never give a guarantee that an IT system will work until after. It’s the way technology is.”

Mr Thompson revealed he had, so far, been given funding only for initial tests in January, saying: “I run out of money at £630,000.”

Overall, HMRC would need up to £450m additional funding to cope with a no deal Brexit, but had received only £78m so far – plus an extra 3,000-5,000 staff

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