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Traders may not be compliant with new customs IT system by end of March 2019

PAC hearing reveals several issues with getting the Customs Declaration Service ready on time, including that traders probably won’t have enough time to get their systems compatible and compliant with the new IT system

HM Revenue and Customs (HMRC) remains positive that the new customs IT system will be ready by January 2019, despite several issues, but admits that won’t give traders much time to ensure they are compliant with the system before Brexit.  

MPs on the Public Accounts Committee (PAC) highlighted concerns that the Customs Declaration Service (CDS) wouldn’t be ready to deal with the possibility of a no-deal Brexit. 

HMRC will phase in CDS in three stages, starting in August, with the aim of completing the roll-out in January 2019. The phased deployment will give users of the system very little time to ensure their own systems are compliant with CDS. 

A National Audit Office (NAO) report published in June found that HMRC would begin to migrate users from the current Customs Handling of Import and Export Freight (Chief) system in August, but that this process was unlikely to be completed until January 2019 at the earliest.  

The export functionality of the system will not be released until December, said the NAO, which means traders who export goods will have only one month to complete the migration.

“HMRC’s phased release strategy means traders involved in the first release will have to support a further two releases and associated changes to their own systems and processes before the end of the year, and will leave some users with less time to migrate,” the NAO report said.

MP Geoffrey Clinton-Brown said the “real crunch” was that in the event of a no-deal scenario the system still “has to work and suppliers have to be compatible with it by 29 March 2019”. He asked HMRC if there would be enough time between January and March for traders to become compliant.

Answering his question, HMRC CEO Jon Thompson said: “Probably not, to be upfront about it, for all traders.”

However, Thompson added that the department had accelerated its contingency plan, which is to upgrade the current Chief system – which has never handled more than 60 million transaction a year – to be able to cope with 350 million declarations, and run it parallel to CDS.

According to HMRC, Chief supplier Fujitsu claims the system is now ready to handle 350 million transactions annually. The department plans to run four test iterations to evaluate the system, and expects to “have a clear view” by the end of September .

The Chief contingency plan, Thompson said, impacts on two risks: timetable and stakeholder engagement.

“When you know chief can hold every transaction, the pressure on the timetable and the migration reduces significantly. Everyone does not have to be on the system by January, so the pressure to migrate reduces significantly,” he said.

“We also have the option that we can run Chief for some considerable time beyond January 2019, we think we can run it into 2020.”

CDS tech and supplier risks

Despite concerns, both from the NAO and the PAC, HMRC remains confident in its timeline for CDS. Kevin Franklin, HMRC’s director for customs transformation, said the department had already integrated the multiple technology components required, and was running performance testing in a production environment. 

“To date, we’re not seeing any major development issues,” he said. However, he added that there had been some issues with the “access security we want to place on our cloud-based technology” and the department has had to put recovery plans in place to resolve it.

“We have identified some gaps between the major component, which is the declaration management system, which is the heart and soul of CDS, the core product and what we want to maintain and enhance UK trade facilitations, so we’re having to work through those,” said Franklin.

Thompson added that the department had a “core dependency” on IBM as its key contractor for CDS.

“We need IBM to stick to the timetable it agreed, which is then reflected in the timetable of the delivery of this project. That is a key dependency for us, and we continue to have high-level conversations about keeping [IBM] accountable for the delivery of this project.”

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