Public Services > Central Government

HMRC outlines contingency plans for its Customs Declaration System

Matteo Natalucci Published 25 October 2017

Department asked for £7.3m to upgrade the current CHIEF system to manage the expected 250m transaction by March 2019

 

HM Revenue & Customs (HMRC) has given evidence to the Public Accounts Committee (PAC) about the risks and contingency plans needed to be in place for the development of its new Customs Declaration System (CDS).

CDS succeeds HMRC’s existing CHIEF (Customs Handling of Import and Export Freight) system which HMRC first started planning to replace in 2013/14.

It had decided that CHIEF’s ageing technology, which it has operated for more than 20 years, would be too expensive and would cause significant delay in meeting the requirements of the Union Customs Code (UCC). The new CDS system will collect customs and excise duties, and value added tax (VAT) from transactions at the border.

All was on schedule until the UK made its Brexit decision. Now, HMRC currently estimates that exiting the EU could increase the number of customs declarations from around 55m to a maximum of around 255m each year, based on current volumes of UK/EU trade. This number is subject to the new customs arrangement negotiated with the EU, and other scenarios exist which may result in different volumes. The existing  CHIEF system can currently process 100m declarations a year which reinforces the need for the new service.

HMRC has already had to recruit an extra 250 people to support the CDS project development.

HMRC’s permanent secretary Jon Thompson told the committee that an estimated £300m-£400m and some 3,000-5,000 additional staff will be needed if the HMCR has to implement the option of leaving the European Union without a ‘special relationship agreement’ on customs by April 2019. 

Thompson said HMRC has already received £78m from the £250m fund set aside by the government this year to plan for the possibility of a ‘hard Brexit’.

HMRC has asked the Treasury for an additional £7.3m to upgrade the current CHIEF system to manage the expected 250m transaction by March 2019, as a contingency plan in case CDS won’t be operational by that time.

HMRC has already spent £630,000 to implement the first two phases out of eight for the CHIEF upgrade, and is expecting the platform to go to a testing environment in January 2018.

The committee highlighted that there was very little contingency in place in case things go wrong on the project.

Thompson said, “The programme has met all of the milestones that it was meant to have done. We can be reasonably confident but we need to be transparent with you.

“There are four risks to this programme. [Integration, testing volumes, migration, and user readiness] Any one of those four risks could either delay the project or ultimate worst case scenario mean that [the system] wouldn’t be ready,” Thompson said.

Thompson added, “It is currently going well but I will never give you any guarantee that an IT system will work”.

HMRC will be able to provide a final update on the status of CDS implementation between April and July 2018.








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