MPs warn of Brexit customs 'catastrophe'

15 November, 2017, 18:33 | Author: Sammy Rose
  • Meg Hillier, the chairwoman of the Public Accounts Committee said HMRC was under'considerable pressure and did not have the funding to develop customs systems for Brexit or plan contingencies

Meg Hillier, PAC chair and Labour MP, said: "Failure to have a viable customs system in place before the UK's planned exit from the European Union would wreak havoc for United Kingdom business, trade and our global reputation".

It would be "catastrophic" if CDS is "not ready in time and if there is no viable fall-back option", the cross-party committee concluded.

The PAC warned the Treasury that it needs to ensure there is funding in place to develop contingency options so that there are no barriers to continuity of service.

In a report published on Tuesday, the influential parliamentary public accounts committee said there was a risk of "massive queues at Dover" and "food being left to rot in trucks at the border".

'Confidence would collapse amid the potentially catastrophic effects'.

"Only four per cent of United Kingdom firms making customs declarations are "trusted traders", with less red tape on the movement of goods, far below the numbers in Germany".

It was "deeply troubling" that HMRC did not have the funding to develop customs systems for Brexit or plan contingencies.

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A government spokesperson said: "The Customs Declaration Service is on track for delivery by January 2019 and has the capacity to deal with a significant increase in customs declarations at the border".

The PAC said, "The existing CHIEF system is its main contingency option, but we are surprised to hear that HMRC and HM Treasury (HMT) are still only "in Brexit and the future of Customs conversation" over the £7.3m needed to upgrade CHIEF".

In its recommendations, the PAC also urged HMRC to manage the "huge uncertainty" faced by a large number of traders. HMRC could, for example, update regularly the information it provides to traders on its website which we have been told has not been updated significantly since 2014.

It also said the government should aim to increase the number of "trusted traders" who are allowed to use simplified arrangements, which is now just 604 - a 10th of the number with such status in Germany. This compares to over 6,000 trusted traders in Germany.

During the transition between the two systems, the old version would operate in tandem with the new one, he added.

However, perhaps most importantly, it is the scale and the pace of change that HMRC is undergoing that is particularly worrying to the Committee.

Secondly, that HMRC reports back to the committee by March with details of how it is managing the CDS project in the context of a much wider transformation agenda, including the Making Tax Digital programme and other vast and complex changes. This is just one month before traders are due to start using it and only a few months before the United Kingdom is due to leave the EU. We agree that HMRC needs to urgently prioritise and make hard decisions, with the support of HM Treasury. The Chancellor's upcoming budget needs to have a strong focus on Brexit contingency plans - this isn't going to be easy to get right.

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