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MPs warn of ‘deeply worrying’ risks if new customs IT systems are not ready for Brexit

Home Affairs committee calls on government to improve contingency planning in case new systems miss Brexit deadline at end of March 2019

MPs have said it is “deeply worrying” that even the slightest delay in the government’s new customs IT system could mean it not being ready for the UK’s deadline for leaving the European Union (EU).

The Home Affairs committee has called for the government to prioritise contingency planning in case the £157m Customs Declaration Service (CDS) being developed by HM Revenue & Customs (HMRC) is delayed or lacks full functionality by the Brexit date at the end of March 2019.

HMRC chief executive Jon Thompson has admitted that it would be “catastrophic” if the new system is not operational on Brexit day.

“The government’s border planning for Brexit is extremely unconvincing,” said committee chair Yvette Cooper. “Everyone is running out of time to make any staffing, infrastructure or procedural changes – and they risk long delays at the border, both in the UK and abroad.”

HMRC started developing CDS before last year’s Brexit referendum, and the system is due to go live in January 2019 – just two months before the UK leaves the EU. CDS will replace the existing Chief customs system used for handling import and export freight from outside the EU, which has been in place for 25 years.

“Chief is designed to process about 60 million customs declarations a year; the pre-referendum planning for CDS had a capacity aim of 150 million declarations,” said the committee in a report examining the implications of Brexit on UK borders.

But HMRC is now predicting that Brexit could require CDS to support 250 million customs declarations a year – and the government still doesn’t know what customs regime will be needed for the import and export of goods to the EU.

The Home Affairs committee referenced evidence given by Thompson to the Public Accounts Committee in October, when he said the CDS project was on schedule and he was “reasonably confident” that it would be delivered by January 2019.

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But Thompson added that he would “never give you a guarantee any IT system is going work” until it goes live, and identified four major risks to the CDS programme: integrating the eight components of CDS with the rest of HMRC; volume and performance testing of the system; migration from Chief to CDS; and user readiness.

“Updated IT systems will be fundamental to the effectiveness of any new customs arrangements,” said the committee.

“It is deeply worrying that any slight slippage in the CDS programme risks it not being available by the time the UK leaves the EU at the end of March 2019. We expect the government to prioritise contingency planning for the eventuality that the CDS system is delayed or lacks full functionality.”

HMRC has said it would cost an extra £7.3m to upgrade the Chief system to act as a backup in case CDS is not ready in time. Another issue is that Chief is not compliant with the EU Customs Code, which is one of the reasons the system is being replaced.

Earlier this year, the National Audit Office (NAO) warned that there was “still a significant amount of work to complete”, which meant CDS may not go live in January 2019. The NAO report came after the Treasury committee said it had lost confidence in the successful implementation of CDS.

HMRC said in September that it had completed 50% of the development work on CDS and was on track for delivery before the Brexit deadline.

“We expect a speedy response to this report from the government to demonstrate that it has now taken these vital matters in hand,” said Cooper. “The current pace of contingency planning is insufficient and risky.”

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