Public Services > Central Government

HMRC looks for clarity as government lays out customs thinking

David Bicknell Published 15 August 2017

Paper to be published today expected to say Britain is looking to remain in customs union with EU for couple of years


Reports today ahead of a government paper to be published later suggest that Britain hopes to continue its current customs arrangements with the EU for some years after Brexit.

The paper is understood to say that UK wants to remain in a customs union with the EU for at least the estimated three years of transition after Britain’s 2019 exit from the union.  

That might help HM Revenue & Customs (HMRC), which is wrestling with the development of a successor to its long-standing CHIEF customs system, and will be looking for as much clarity as it can glean from the government’s white paper.

The paper is believed to suggest that subsequent arrangements after the transition period point to two options: a new customs partnership, which it is believed would avoid the need for a customs border between the UK and the EU, or what has been described as a “highly streamlined customs arrangement”.

The timescale envisaged is thought to be around two years, or possibly shorter. The proposals will depend on the agreement of the EU.

The National Audit Office (NAO) recently warned there is a risk that HMRC’s new Customs Declaration Service (CDS) may lack full scope and functionality by the time the UK plans to leave the EU in March 2019.

The report’s publication was accompanied by colourful quotes from Amyas Morse, head of the National Audit Office, who said that UK Brexit plans could collapse like a ‘chocolate orange’ and a ‘horror show’ if the new customs IT system is not ready.

CHIEF helps collect around £34bn in tax and duty on imports from countries outside the EU each year. In 2015-16, it processed around 55m import and export customs declarations. In 2015 nearly £700bn of goods crossed the border. The continued smooth operation of these crossing is critical to the UK economy.

Uncertainty in the UK’s position on customs in the run up to and post-Brexit has added to HMRC’s difficulty in delivering the new system, which is why it will expect more certainty in where Britain is headed customs-wise.

An HMRC spokesperson recently said, “The Customs Declaration Service (CDS) is on track for delivery by January 2019 and will support international trade once the UK leaves the European Union.

“We took the decision to bring in a new declaration system before the EU referendum, but the service remains fully capable of dealing with how the UK’s exit from the EU will impact on customs declarations at the border.”

techUK CEO Julian David said of the government's paper, “A frictionless border with the EU is vital for the kind of just-in-time services that the UK tech sector delivers.  For any industry with complex supply chains, the costly additional paperwork and long delays that will occur without a new custom system, would place an unnecessary burden on the business customers and ordinary consumers who use their products.

“The publication of the government’s paper is an important step to providing clarity on the UK’s future customs relationships but the devil will be in the detail.  More work is clearly needed so as not to leave businesses in the dark as to how they will be expected to operate in the future.

“techUK welcomes the acknowledgement of the need for an ‘interim period’, but the tech sector needs to know how long this period will be and what kind of arrangement will be put in place in the interim.  We are very clear – a soft landing from Brexit will require a long runway."

He continued, "Getting the customs processes themselves right will also be critical in ensuring any new UK/ EU system functions post Brexit.  That will almost certainly involve creating new tech systems to cope with additional red tape, and ensuring that these systems can cooperate with those in other EU countries.  This will take time, and so the sooner the government can give concrete, technical directions on the customs system it wants, the quicker UK tech can get to work on the solution.”

Update: the customs paper has now been published.


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