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HM Revenue & Customs (HMRC) has completed 50% of the development work on the UK’s new customs IT system and is on track for delivery before the Brexit deadline. However, HMRC chief executive Jon Thompson told MPs that he cannot guarantee the new system will be ready on time.
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The department started developing the Customs Declaration Service (CDS) – intended to replace the ageing Chief system used for handling import and export freight from outside the European Union (EU) – before the referendum vote for the UK to leave the EU.
But with Brexit approaching in March 2019, CDS has become a critical factor in the UK’s ability to handle the expected increase in customs transactions associated with leaving the EU customs union.
In March 2017, MPs on the Treasury Committee said that “confidence in the successful implementation of the CDS – a project that HMRC itself describes as ‘business critical’ – has collapsed”. In July, the National Audit Office warned there was “still a significant amount of work to complete”, which meant CDS may not be ready on time.
But in a letter on 12 September to the new committee chair, Nicky Morgan, Thompson said “significant progress” had been made since then.
“The programme continues to meet critical milestones for IT development, and we have built an environment that mirrors the live environment to support development activity,” he said. “CDS has completed 43% of features/requirements, however not all features are the same size so we have actually completed more than 50% of the total development effort. Completed means built, tested and signed-off.
“The delivery timetable is tight, but we remain on track to complete delivery of the new CDS system in August 2018 and transition users onto the new system by January 2019. While there are always risks that the programme might encounter unforeseen problems later, there is currently nothing to suggest that this timetable will not be achieved.”
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However, when pressed on the project during a committee meeting on 14 September, Thompson said he could not give absolute guarantees about any major IT programme.
“I’m wary being confident about technology projects. Technology projects are complicated; unforeseen things can happen. I’m not prepared to commit myself entirely that everything will work. Something will happen that means you need appropriate contingencies,” he told MPs.
“I’m reasonably confident [CDS going live on time] will happen. [The project] is on time. But I can’t guarantee that everything is going to be fine because there’s another year to go.”
As part of the contingency plan, Chief will continue to run alongside CDS, and HMRC is working to make Chief capable of handling greater volumes than its current limit of around 60 million customs declarations per year, in case CDS is not ready in time. Leaving the EU is expected to bring a five-fold increase in customs transactions.
“We are confident in this approach as we know Chief is a reliable system that successfully collects £34bn of revenue each year,” said Thompson in his letter to Morgan.
HMRC operates 57 different IT systems at UK borders, of which 25 require changes to cater for Brexit. Thompson said that of those, three systems will have to be re-implemented, while the others require “just an amendment”.
“They are [also] on track, but I’m not prepared to give a guarantee,” he said.
A report from the Institute for Government this week called for HMRC to prioritise delivering CDS on time before focusing on “new technologies”.
“The [CDS] programme started long before the EU referendum was announced but is critical to customs after Brexit. It is under real pressure and successful delivery is in doubt,” the report said.
“The programme has had to contend with constricting timelines and a huge change in some requirements. Non-delivery would leave the UK facing significant disruption on day one.
“Despite these government IT challenges, new and innovative technology is being touted as the answer to the Brexit customs problem. With less than two years to deliver and no clear idea of what this ‘new technology’ is, ministers must be clear about what is and what is not feasible.”