Brexit: New Customs system not fit for purpose, says FTA

Brexit: New Customs system not fit for purpose, says FTA

The Freight Transport Association (FTA) has raised serious concerns about the progress of HMRC’s Customs Declaration Service (CDS) programme and its suitability to handle the anticipated levels of Customs declarations at British ports post-Brexit.

FTA said it has “grave doubts” that CDS, which is currently under development, will be able to cope with the anticipated 255 million extra Customs declarations to be made at British ports each year when the UK leaves the EU.

It follows the publication of a National Audit Office (NAO) report earlier this week which highlighted some of the key issues HMRC is managing ahead of the planned implementation of CDS, scheduled for January 2019, two months before the Brexit deadline in March 2019.

The NAO report suggests there is still a significant amount of work to complete, and there is a risk that HMRC will not have the full functionality and scope of CDS in place by March 2019 when the UK plans to leave the EU.

Head of the National Audit Office, Amyas Morse, said CDS may need to be ready much earlier than originally planned if there is no agreement extending timescales on the transition to any new customs arrangements.

“Customs problems have obvious implications for the flow of goods in and out of the UK, so Government as a whole needs to decide whether the extra cost and effort of getting a working system in place for day one is an insurance premium worth paying.”

James Hookham, FTA’s Deputy Chief Executive, said: “With only two months anticipated between the delivery of the CDS programme and the UK’s departure from the EU, it is imperative that all the potential problems have been ironed out in the system before implementation.

“Without assurances that the rigorous stress tests recommended by the NAO have been undertaken, to ensure the Customs system can cope with the high volumes of traffic it will be handling, HMRC will be creating unnecessary uncertainty for British businesses, at a time stable trading conditions will be vital for our economy.”

Hookham also questioned whether exporters and importers will have enough time to be trained on the new system.

“It is irresponsible to suggest that a programme like CDS can be introduced overnight, and it is vital that the government and its negotiators do not leave business on a cliff edge, with no deal agreed at the UK’s point of departure from the EU. Britain’s economy needs a transitional period to ensure that Customs declarations can be moved to a new handling system in a controlled and managed method. To do otherwise could be disastrous for the UK.”

More than 180,000 businesses are expected to use the new CDS system to facilitate UK-EU trade. HMRC needs to ensure that its implementation of the new programme is supported by the whole of government to smooth its introduction, continued Hookham:

“FTA’s members are wholeheartedly in support of the NAO’s call for HMRC to receive whatever support it needs from across government to ensure that the CDS system can be introduced on time and with the necessary capacity. 

“Funding and resources need to be prioritised to speed up progress with the programme, alongside the development of a full scale contingency plan, to ensure that the UK’s logistics industry is not left high and dry by a failure to deliver the new Customs system on time.”

HMRC started plans to replace its current customs system, known as CHIEF, following changes to EU legislation which would have been costly and difficult to make on its ageing technology. CHIEF collects around £34 billion in tax and duty on imports from countries outside the EU each year. In 2015-16, it processed around 55 million import and export customs declarations. In 2015 nearly £700 billion of goods crossed the border.

Speaking to the Guardian, an HMRC spokesman said CDS remained “on track for delivery by January 2019 and will support international trade once the UK leaves the EU”.