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| Brexit: failure to update customs system could be 'catastrophic' | Brexit: failure to update customs system could be 'catastrophic' |
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| The number of customs declarations after the UK’s departure from the EU might increase fivefold, report warns | |
| Lisa O'Carroll Brexit correspondent | |
| Tue 14 Nov 2017 09.54 GMT | |
| Last modified on Tue 14 Nov 2017 11.18 GMT | |
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| A failure to have a viable customs system in place to cope with Brexit when the UK quits the EU would be catastrophic for business and the reputation of the country, the government has been told. | A failure to have a viable customs system in place to cope with Brexit when the UK quits the EU would be catastrophic for business and the reputation of the country, the government has been told. |
| The influential parliamentary public accounts select committee said it was deeply worried that Her Majesty’s Revenue and Customs did not yet have the funding from the government to develop contingency plans for Brexit. | The influential parliamentary public accounts select committee said it was deeply worried that Her Majesty’s Revenue and Customs did not yet have the funding from the government to develop contingency plans for Brexit. |
| It received evidence that the number of customs declarations that HMRC would have to process could increase fivefold to 225m a year and that “a failed customs system could therefore lead to huge disruption for business with delays potentially causing massive queues at Dover and resulting in food being left to rot in trucks at the border”. | It received evidence that the number of customs declarations that HMRC would have to process could increase fivefold to 225m a year and that “a failed customs system could therefore lead to huge disruption for business with delays potentially causing massive queues at Dover and resulting in food being left to rot in trucks at the border”. |
| The report follows earlier testimony given by HMRC bosses to the committee that it could take £800m and 5,000 extra staff to develop a new Brexit-proof customs system. | The report follows earlier testimony given by HMRC bosses to the committee that it could take £800m and 5,000 extra staff to develop a new Brexit-proof customs system. |
| The HMRC chief executive, Jon Thompson, warned it could take between five and seven years to get a streamlined system to deal with imports and exports in place. | The HMRC chief executive, Jon Thompson, warned it could take between five and seven years to get a streamlined system to deal with imports and exports in place. |
| The committee’s chair, Meg Hillier, said: “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. | The committee’s chair, Meg Hillier, said: “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. | “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,” she added. | “This is deeply worrying,” she added. |
| Hillier said a relatively small sum was needed to upgrade the system, known internally as the Chief system, to give customs officers and business a safe, fallback option. | Hillier said a relatively small sum was needed to upgrade the system, known internally as the Chief system, to give customs officers and business a safe, fallback option. |
| She said she was concerned about the lack of urgency relating to such an upgrade which would provide some peace of mind to traders and freight owners. | She said she was concerned about the lack of urgency relating to such an upgrade which would provide some peace of mind to traders and freight owners. |
| “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 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,” she said. | “HMRC must press the case to secure this funding now and ensure that, if other plans fail, customs will be fit for purpose,” she said. |
| The report said HMRC needs just £7.3m to upgrade its Chief system and called on the Treasury to ensure it gets this money by the end of the year. | The report said HMRC needs just £7.3m to upgrade its Chief system and called on the Treasury to ensure it gets this money by the end of the year. |
| The committee also expressed concern over the HMRC’s capacity to bring in the changes, noting that it is “currently managing an unsustainable amount of change” with a major transformation programme in 15 areas, including making tax payments digital. | The committee also expressed concern over the HMRC’s capacity to bring in the changes, noting that it is “currently managing an unsustainable amount of change” with a major transformation programme in 15 areas, including making tax payments digital. |
| It also has concerns over HMRC’s priorities. The tax authority told the committee that the customs declarations upgrade is in its top seven important programmes. | It also has concerns over HMRC’s priorities. The tax authority told the committee that the customs declarations upgrade is in its top seven important programmes. |
| “We are concerned about the department’s ability to balance its overall risks and ensure it puts emphasis on the right areas,” the committee concluded. | “We are concerned about the department’s ability to balance its overall risks and ensure it puts emphasis on the right areas,” the committee concluded. |
| The committee acknowledged that the uncertainty around Brexit was a “complicating factor” but said “it should not be used by HMRC to avoid taking action now” to ensure a viable contingency plan was in place for March 2019, when the UK is scheduled to leave the EU. | The committee acknowledged that the uncertainty around Brexit was a “complicating factor” but said “it should not be used by HMRC to avoid taking action now” to ensure a viable contingency plan was in place for March 2019, when the UK is scheduled to leave the EU. |
| “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 report warned. | “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 report warned. |
| At the moment no customs declarations are needed for any business trading within the single market. After Brexit 132,000 business will have to make customs declarations for the first time and they need to be informed about a new system as soon as possible, said the report. | At the moment no customs declarations are needed for any business trading within the single market. After Brexit 132,000 business will have to make customs declarations for the first time and they need to be informed about a new system as soon as possible, said the report. |
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