HM Revenue and Customs has pushed back against claims it will not be ready to handle extra customs checks if the UK leaves the EU in March without a deal, saying it has made “good progress” towards a system that could handle the added workload.
HMRC has “well-developed plans to ensure that there will be a functioning customs, VAT and excise system in the unlikely event of a no deal”, a spokesperson told CSW. The tax agency was responding to comments by Meg Hillier, the head of the Public Accounts Committee, who said she was concerned about delays to its customs system upgrade.
Hillier wrote to HMRC perm sec John Thompson this week to say MPs were “disappointed” about delays to the Customs Declaration Service, and concerned that it would not be ready to cope with additional customs and tax demands in the event of a no-deal Brexit.
Giving evidence to the committee in September, Thompson said HMRC would have a customs system in place fit for a no deal exit. “You do not therefore currently see any significant risk to tax revenues or tax compliance. We do not share your optimism,” Hillier wrote.
The updated customs system was set to be fully operational in January, and Hillier said MPs were unimpressed that the final phase of the rollout would happen two months late in light of “previous and repeated assurances” that it would be delivered on time.
HMRC is now trialling a dual system that will use parts of CDS alongside parts of the system it is replacing, CHIEF, to process imports and exports until CDS is fully rolled out in March 2019.
“We have always said the timeline for implementing the Customs Declaration Service is tight, but that we would operate the current system (CHIEF) in tandem throughout the transition,” the HMRC spokesperson said.
“We have made good progress to ensure that the UK has a customs system capable of handling any potential volume of customs declarations after March 2019.”
CDS is being built to manage 300 million customs declarations a year – nearly six times the 55 million CHIEF handles now – with a peak of 100 declarations per second. Work to develop the system began in 2013-14, but following the EU referendum it became clear that post-Brexit, it would need to process around five times the number of declarations it deals with now.
As a further contingency measure, HMRC is also scaling up the existing CHIEF system to handle a potential increase in declarations.
In response to criticism that HMRC had been slow to tell businesses how to prepare for a no-deal Brexit, the spokesperson said: “We have engaged with business representative bodies who will be key partners in reaching businesses to ensure that they understand any implications for them.”