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Customs IT setback alarms MPs

03/04/17

Treasury Committee warns of post-Brexit trade implications of problems with Customs Declarations Services programme

Parliament’s Treasury Committee has warned that there could be major disruptions to UK trade in the future if the programme for a new customs IT system does not get back on track.

Dover port aerial viewThe committee’s chair, Andrew Tyrie, has written to Nick Lodge, director general of transformation at HM Revenue & Customs (HMRC), and Tony Meggs, chief executive of the Infrastructure and Projects Authority (IPA), to assess the state of the project – and warned of its “critical importance” in the light of the Government’s decision to leave the EU Customs Union.

This follows indications that the development of the Customs Declaration Services (CDS) – which is scheduled to take over from the existing Customs Handling of Import and Export Freight (CHIEF) system in January 2019 – is not running to plan.

HMRC has indicated to the Treasury Committee that in January the project was assessed as ‘amber/red’, signifying doubts over the successful delivery of the projects, following a more positive ‘green’ assessment in November of last year.

Reassessment

In Tyrie’s letter to HMRC he asks for the reasons for the reassessment with the details of the risks, and for a description of contingency plans if the CDS is not ready by the time the UK leaves the EU, expected to be in March 2019. This comes with a request for information on any changes to the programme since it was launched.

He also refers to indications of a planned technical upgrade to the CHIEF service, and asks if this will enable it to deal with the extra customs declarations following Brexit.

In Tyrie’s letter to the IPA he asks it to carry out a delivery confidence assessment of the CDS programme, focused on why its status was downgraded.

He also issued a statement saying: "In just 67 days, confidence in the successful implementation of the CDS – a project that HMRC itself describes as 'business critical' – has collapsed.  On 25 November 2016 it was given a 'green' rating, meaning that it was 'successful' and 'on time'. On 31 January 2017, it was given an 'amber/red' rating, meaning it was 'in doubt', with 'major risks', and needing 'urgent action'.

"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.

"The CDS is needed in order to handle a possible fivefold increase in declarations that could occur when the UK leaves the EU. The consequences of this project failing, or even being delayed, could be serious. Much trade could be lost. The project, therefore, merits a high degree of scrutiny by Parliament."

CHIEF capability

The existing CHIEF system connects with five independent trade systems that serve hundreds of carriers, transit sheds and freight forwarders, recording and tracking the movement of goods within ports and airports. It also part of HMRC’s risk assessment process.

Figures from the Office for National Statistics show that 53% of the UK’s imports came from the EU in 2016. There have been numerous warnings that leaving the Customs Union will create new barriers to trade, and fears of the CDS not being in place are likely to increase alarm among carriers, freight operators and companies that import from other European countries.

Image, Dover Ferry Port from John Fielding, CC BY 2.0 through flickr

 

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