HMRC may need extra 5,000 staff to tackle Brexit customs demands, MPs told

Britain's tax authority could need up to 5,000 extra staff to cope with the increased customs demands on the first day of Brexit, MPS have heard.

Jim Harra, HMRC's director general of customer strategy, said in a "crude estimate" the organisation could require an additional 3,000 to 5,000 people by March 30 2019, but added that he did believe it would reach those heights.

Speaking to MPs on the Treasury Select Committee, Mr Harra said the authority would have to tackle an additional 130,000 new companies after Brexit that import and export with the EU alone and do not currently come into contact with British customs.

He admitted that introducing the Brexit changes along with other demands on the authority was a "big challenge".

He said: "It is based on a crude extrapolation. If your customs declarations are multiplied five fold, if you multiplied your resources five fold, what would that come out at.

"It would come out at an extra three to 5,000 people.

"Do we believe that is what we really need? No, I don't think we do because we know that even if the number of declarations grow a large number of those will be made by existing international traders whose compliance we already manage.

"On the other hand there are probably about 130,000 new businesses that will be dealing with customs for the first time and there is a big challenge in reaching them, supporting them and getting them to be able to comply with their obligations on a transitional basis as well as on an ongoing basis."

The meeting comes after the Government revealed its "future partnership paper" last month, which contained two potential options for long-term custom arrangements.

The more ambitious option, described as "innovative and unprecedented", would see Britain "mirroring" Brussels tariffs for goods that will eventually enter the EU to avoid the need for a UK-EU customs border.

Alternatively, a "streamlined" approach would see the UK negotiate agreements with the EU to reduce trade barriers and harness technology to avoid long queues at ports.

Focusing on the paper, which had significant input from the organisation, Labour MP John Mann pressed HMRC chief executive Jon Thompson, saying there was "uncertainty" over its "competence and capability" for handling the change.

Mr Thompson said HMRC did not have the money or resources at this point to tackle the shift, but "extensive conversations" had been had with the Treasury on the issue.

However, he said the authority may have to prioritise Brexit changes over existing projects to transform and improve the HMRC, if it is to cope when Britain divorces from the European Union.

He said: "There is an unprecedented level of technological change in HMRC. We are attempting to digitise the entire tax system at the moment and (Brexit customs changes) would be added on."