Brexit and the future of Customs inquiry
Closed
What the inquiry looked at
“HM Revenue & Customs (HMRC) was due to complete a five-year programme for a new Customs Declaration Service (CDS) by early 2017. However, delays mean that CDS will not be fully operational until January 2019. In July the National Audit Office (NAO) published a report into CDS that found there are still significant amounts of work required to meet this new target. If there are further delays, CDS may not be running fully by the time the UK is due to leave the European Union in March 2019. Although HMRC due diligence has found that the CDS system will remain suitable following the UK’s withdrawal from the EU, there is considerable uncertainty as to what customs environment the UK will operate in. On 9 October the Government published a White Paper describing future customs legislation for post-Brexit. It set out potential scenarios for a new customs relationship with the EU—but it is not yet clear whether HMRC’s existing CDS programme would work for all of them without modification. It is also not clear whether the proposed finish date of January 2019 would give time to make those modifications. The Public Accounts Committee will ask officials from HMRC about CDS’ progress to date, outstanding risks to completion, and resilience in a number of potential scenarios for leaving the European Union.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
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.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 26 September 2017 to 28 March 2018.
- Oral evidence 25 Oct 2017
- Report 14 Nov 2017
- Correspondence 2 letters
What it recommended
The committee's recommendations are not listed here yet. Read them in 2nd Report - Brexit and the future of Customs ↗ on parliament.uk.
Evidence
Oral evidence sessions 1
- 25 Oct 2017No witnesses recordedparliament.uk ↗