HMRC under fire over customs declaration system

The Treasury committee is calling for urgent scrutiny of the ‘business critical’ Customs Declaration Service (CDS) being developed by HMRC to handle an anticipated five-fold increase in activity levels once the UK leaves the EU, which it says is at serious risk of not being ready on time

CDS will replace the current customs handling of import and export freight (CHIEF) system which handles over 60 million declarations a year. The new service is designed to deal with the much higher volumes anticipated after Brexit, when the UK will be negotiating its own trade agreements. HMRC modelling has indicated that the total number of customs declarations and inspections could be five times as many if a customs declaration were required for all UK-EU trade.

The Treasury committee’s inquiry into the UK’s future economic relationship with the EU heard that the CDS project was given a green rating in late November 2016, which committee chair Andrew Tyrie said indicated it was successful and on time.

However, on 31 January 2017, the project was given an amber/red rating, meaning it was in doubt, with major risks, and needing urgent action.

Tyrie said: ‘In just 67 days, confidence in the successful implementation of the CDS – a project that HMRC itself describes as “business critical” – has collapsed.

‘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.’

In response to a letter from Tyrie outlining concerns, Jim Harra, director general (customer, strategy and tax design) of HMRC, said: ‘HMRC is prioritising delivery of CDS for Day 1 of the UK leaving the EU.

‘HMRC’s assessment is that the CDS delivery schedule is feasible and that current risks and issues are resolvable at this stage.

‘The timetable for delivery is challenging but achievable. CDS implementation is a large and complex programme, including interfaces with external and internal systems that need to be developed and for this reason our assessment is that the progress is amber/red pending further progress.’

Harra indicated that HMRC had contingency plans for what to do if the CDS system was only partially ready on time, which include use of the existing CHIEF system and ‘building on the existing manual fall-back procedures that are already in place.’

However, Tyrie has written to Nick Lodge, the Treasury director general transformation for more information about the risks involved, and to the Infrastructure and Projects Authority to ask its latest assessment.

He warned: ‘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.’

Harra’s letter to Tyrie is here.

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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