PAC has ‘serious concerns’ over UK border and new customs IT system

The Public Accounts Committee (PAC) continues to voice its concerns over the readiness of HM Revenue and Customs’ (HMRC) new customs IT system.

In its report on HMRC’s performance in 2017-18, the PAC said that although it recognises that the department is facing significant challenges, the committee is worried about progress.  

It added that the committee members “remain concerned about the risks to customs and borders post-Brexit and the impact on British businesses”.

This comes as HMRC has admitted that despite launching the first phase of its replacement customs system, the Customs Declaration Service (CDS), on time in August 2018, the export functionality of the system is being delayed and will “now not be ready until March 2019 at the earliest”, according to the department. It is therefore unlikely to be ready by the time the UK leaves the EU.  

“The recently announced further delay to HMRC’s new Customs Declaration Service – which means that it is very unlikely to be ready for exporters by the time of Brexit, and the need for further development of HMRC’s systems so that by March 2019 they can handle postponed accounting for import VAT in the event of no deal – underline the risks,” the PAC report said.

The department is upgrading its legacy Customs Handling of Import and Export Freight (Chief) system as a contingency, and will run this alongside CDS.  

HMRC previously told the House of Lords EU Committee that there is a plan in place to “introduce customs controls between the UK and the EU” from March 2019 if necessary, in the event of a No Deal Brexit. 

PAC chair Meg Hillier said that “serious concerns remain over the new Customs Declaration Service and operations at the border after Brexit” and added that the “the potential consequences of no-deal Brexit are extremely serious” and the committee will be seeking clarity on this from HMRC next week.

The PAC report also found that HMRC, which had to put a range of projects on hold to deal with its Brexit work, has not performed as well as it should. Customer satisfaction with the department’s digital services was set at 79.8%, which is just below its 80% target, but PAC said the customer service targets “do not fully reflect the customer experience”, and therefore “undermines its ability to plan and deliver services effectively.”

“Our committee recognises the scale of the challenges facing HMRC and the time-critical nature of its Brexit work. But the authority must not lose sight of its wider responsibilities to UK taxpayers,” added Hillier.

CDS is not the only system looking unlikely to be ready by the time the UK leaves the EU. Nearly all the major projects to replace or change key systems at the UK border are at risk of not being delivered by the time the country leaves the European Union, according to a National Audit Office (NAO) report published in October. The report found that 11 out of 12 critical border IT systems are at risk of not being ready.