MPs warn over failure to complete new customs system before Brexit

Failure to complete the introduction of a new customs system by the date of Brexit in 2019 would be "catastrophic", with the risk of huge disruption for businesses, massive queues at Dover and food being left to rot in trucks at the border, a parliamentary report has warned.

The House of Commons Public Accounts Committee said the number of customs declarations which HM Revenue and Customs must process each year could increase almost five-fold after the UK's departure from the European Union - from 55 million to 255 million.

But HMRC does not yet have the funding to increase the capacity of its new Customs Declaration Service to deal with the consequences of Brexit, said the committee.

Its report warns that "much remains to be done" to have an effective CDS system in place on time and urged the Treasury to ensure that funding is in place to develop contingency plans to avoid gaps in the service.

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 committee's chairwoman, Labour MP 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.

"This is deeply worrying. HMRC requires a relatively small sum to upgrade the current Chief (Customs Handling of Import and Export Freight) system - a move which would provide some peace of mind to traders, many of whom are still operating with limited information and in great uncertainty.

"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."

The report described the introduction of CDS as "a programme of national importance that could have a huge reputational impact for the UK if it is not delivered successfully".

Uncertainty over the outcome of Brexit negotiations should not be used by HMRC as an excuse to hold back from action to scale up the system to deal with the anticipated rise in workload, ensure that a viable Plan B is in place well before January 2019 and communicate with traders about the changes ahead, said the committee.

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."

A Government spokesman 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.

"We've already allocated over half a billion pounds in funding to ensure a successful exit from the EU and we will have a fully functioning UK customs service on day one post-Brexit.

"HMRC will continue to operate the current service (Chief) in tandem with CDS during the transition from one system to the other. This will provide an additional level of contingency, should it be required."