Public Services > Central Government

HMRC’s CHIEF thinking highlights Whitehall’s post referendum IT dilemma

David Bicknell Published 19 August 2016

Even large departments are finding that their advanced long-term planning to replace key systems remains subject to ‘Brexit’ uncertainty


The extent to which Whitehall departments’ ICT plans are up in the air post-EU referendum has been revealed by HM Revenue & Customs (HMRC).

HMRC has been working for over two years to find a way forward to replace its Customs Handling of Import & Export Freight (CHIEF) system.

Back in 2014, the agency published a document which explained why CHIEF needed to be replaced.

It explained it was because the current service is based on “ageing technology” and within the next seven to 10 years, there are likely to be several EU legislative changes to international trade processes. These changes include the Union Customs Code (UCC), part of the modernisation of customs which will serve as the new framework regulation on the rules and procedures for customs throughout the EU.

At the time, HMRC expected the UCC legislation and changes to apply from May 2016 when the old customs legislation would cease to apply. However, it said, there would be a period of transition from 2016 to 2020 during which the changes will be put in place.

It added that some UCC changes will happen before the current CHIEF service is replaced, so HMRC will need to consider how best to handle these services so that users can meet the new EU requirements. In 2017, it said, the replacement service will reflect all of the UCC changes currently expected and will also be flexible enough to reflect any future EU changes.

Last year, it emerged that HMRC had decided against launching an invitation to tender (ITT) for the replacement of CHIEF, preferring to develop a replacement using a mix of internal development, commercial off the shelf (COTS) packages and external suppliers, as required, to achieve the best combination of a user-friendly, effective system and value for money."

In its IT strategy revealed in January this year, six months before the referendum, HMRC said its work on Customs Declaration Services (CDS) would involve finding a replacement CHIEF that will “rationalise and transform the asset base into a modernised, simplified, streamlined and more integrated suite of systems that are easier and more cost effective to maintain, and which also enable HMRC to comply with EU legal mandates.”

It is understood that discussions are continuing with suppliers on this but now post-referendum, as HMRC told Government Computing this week, “HMRC remains committed to providing world class digital services to its customers, including those that trade across borders. We are evaluating our IT transformation in the light of the UK's decision to leave the EU and are working closely with our suppliers.”

One of the areas that it is understood this impacts is how a CHIEF replacement could scale to cope with the potential for an increase in customs declarations, which would be the main change if we left the EU customs union.

Trade secretary Liam Fox was recently reported as saying that the UK should pull out of the EU Customs Union, in which the EU’s 28 member countries form a single territory for customs purposes. This means that no customs duties are paid on goods moving between EU countries, all states apply a common customs tariff for goods imported from outside the EU and goods that have been legally imported can circulate throughout the EU with no further customs checks.

Given Dr Fox’s suggestions on customs union, and Downing Street subsequently having to “clarify” his comments, saying no decision had been made on whether Britain would seek to be part of the EU customs union, it is perhaps no surprise that Whitehall departments like HMRC are still “evaluating our IT transformation in the light of the UK's decision to leave the EU and are working closely with our suppliers.”

That may be the case for some time yet.

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