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’ (HMRC) new customs system, the Customs Declaration Service (CDS), 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 European Union (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 CDS 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 National Audit Office.
13 November 2017