The Report forms part of PAC’s ongoing examination of aspects of
Brexit. The Committee takes evidence on Brexit and the UK
border on Monday, 20 November.
COMMENT FROM PAC CHAIR MEG HILLIER MP
“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.
“HMRC is under considerable pressure to deliver the new Customs
Declaration Service in time, but it does not yet have funding to
increase the capacity of CDS to deal with the consequences of
Brexit – nor to develop contingency options.
“This is deeply worrying. HMRC requires a relatively small sum to
upgrade the current CHIEF 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.”
PAC REPORT SUMMARY
Under current plans, the UK is set to leave the European single
market and the customs union in March 2019. It would be
catastrophic if HM Revenue & Customs’ new customs system, the
Customs Declaration Service, is not ready in time and if there is
no viable fall-back option.
In 2015, around 55 million customs declarations were made by
141,000 traders. The UK’s exit from the EU could see the number
of customs declarations which HMRC must process each year
increase five-fold to 255 million. A failed customs system could
therefore lead to 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.
This is a programme of national importance that could have a huge
reputational impact for the UK if it is not delivered
successfully.
The uncertainty regarding the outcome of UK-EU negotiations is a
complicating factor but it should not be used by HMRC to avoid
taking action now in areas including: scaling up the CDS service
to handle 255 million declarations; ensuring a viable contingency
option is in place well before January 2019; and communicating
with traders.
There are financial as well as operational implications of not
acting now. This is a tight timetable at the best of times. With
the hard deadline of Brexit, delay is not an option.
The Treasury needs to ensure there is funding in place to develop
contingency options so that there are no barriers to continuity
of service. HMRC also needs to do a lot more to work with the
many businesses affected.
Much remains to be done to have an effective Customs Declaration
Service in place, on time, and that traders know how to use.
We intend to keep a close eye on this programme and expect to
review progress early in the Summer of 2018, following a further
review by the NAO.
NOTES FOR EDITORS
The Report is available in HTML and PDF formats via the following
links:
https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/401/401.pdf
https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/401/40102.htm
Oral and written evidence can be found via the Publications link
on the inquiry page here.
