Government report

Catastrophe looms if IT is not ready for Brexit

The UK Parliament published the report “Brexit and the Future of Customs”. It focuses on the UK customs system transition from CHIEF to CDS. Are you ready?

The report of the UK House of Commons titled “Brexit and the Future of Customs” sheds light on the replacement of the current UK customs system (CHIEF) by the new IT system, the Customs Declaration Service (CDS). 

The report states that it would be catastrophic if CDS is not ready in time for Brexit and if there is no viable fallback option. While HMRC maintains that the transition program is on track and well governed, it also confirms the remaining risks, highlighting four major areas: integration, testing, trader migration, and user-readiness. 

The new report concludes that much remains to be done for the prompt implementation of a CDS that is effective and that traders know how to use. Progress will be assessed in early summer 2018 following a further review by the UK National Audit Office.

View the official report “Brexit and the Future of Customs” 

In 2015, around 55 million customs declarations were submitted by 141,000 traders. When the UK exits the EU, the number of customs declarations that HMRC must process each year could increase fivefold to 255 million. This further amplifies the importance of a smooth system transition from the current UK customs system CHIEF to the new CDS – a process that HMRC started planning for in 2013–14. 

The new report by the Public Accounts Committee of the House of Lords is currently awaiting an official government response. Among the main conclusions and recommendations:

  • HMRC has not done enough to manage the huge uncertainty faced by traders. 
  • HMRC should better engage with traders and assess progress by January 2018.
  • HMRC should ensure CDS and the CHIEF contingency option can handle 255 million annual declarations with the flexibility to integrate customs and other trade policies such as tariff changes, free trade agreements, and quotas.
  • HMRC does not have the funding to increase the capacity of CDS or develop contingency options. HMRC doesn’t know how much the upgrade will cost and has only started upgrading CHIEF to last longer.
  • The whole CDS project is at risk because HMRC is managing an unsustainable amount of change. By March 2018, HMRC should report on how it can handle CDS, other digital transformation projects, and Brexit-related challenges.

Other points of interest:

  • HMRC will know between April and July 2018 whether CDS will be ready by March 2019.
  • HMRC believes that the number of traders needing to make declarations will rise from 141,000 to 273,000.
  • Brexit complicates things but cannot be used as an excuse for the slow pace of project delivery.
  • Engagement with traders will start by Easter 2018, but full engagement could slip until 2020 if a transition deal is agreed with the EU.
  • Only 604 out of 141,000 CHIEF-registered traders have AEO status. HMRC will not start promoting AEO benefits until the future UK-EU customs relationship is clearer.
  • CDS has £170 million in funding to integrate all eight technology components by November 10.

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