HMRC will shut down Chief system by end of March 2023

The government has announced that the old Customs Handling of Import and Export Freight (Chief) system will be switched off by the end of March 2023 – three years after originally planned.

HM Revenue and Customs (HMRC) has worked for years to replace the Chief system with a new platform, the Customs Declaration Service (CDS), and had aimed to turn off the legacy platform by March 2020, with CDS originally due to be fully deployed by January 2019.

In August 2018, the government began the first phase of its roll-out of CDS, intending to replace Chief for handling import and export freight from outside the country. Chief, which had been in place for 25 years at the time, could handle only about 60 million customs declarations a year, but with Brexit looming, CDS was estimated to be required to handle volumes of up to 255 million declarations annually.

The new CDS system was due to become the only system to operate once the UK left the European Union (EU), but it was not ready to handle the large increase in customs declarations expected. Instead, the government focused on updating Chief, adding functionality to the system.

Instead of switching off Chief, HMRC launched a dual approach, with traders using Chief for customs declarations relating to imports in Great Britain, and CDS used for those relating to Northern Ireland until CDS had been scaled to be able to handle the increased volumes of declarations.

The government now feels confident that CDS can be rolled out completely, and will therefore close the Chief system in two stages. By 30 September 2022, import declarations on the system will close, and by 31 March 2023, export declarations will close.

Sophie Dean and Katherine Green, directors general for borders and trade at HMRC, described CDS as “a key part of the government’s plans for a world-leading fully digitised border that will help UK businesses to trade and to prosper”.

They added: “This announcement will provide clarity for traders and the border industry. We are committed to making the switch-over as smooth as possible and are working to ensure traders are fully supported with the new processes.”

The road to getting CDS ready for trade has been fraught. The focus on upgrading Chief, rather than focusing on CDS functionality, led to further costs and time, and was criticised widely. A National Audit Office report in October 2019 found that the focus on Chief had also meant HMRC had to extend its contract with Fujitsu for a further year to support the legacy platform, at a cost of £12m.

Despite the issues, HMRC remained firm that CDS would be ready by the time the UK left the EU, but as the date loomed, it became clear this was not going to be the case.

In November 2020, industry told a House of Lords Committee that CDS functionality remained “unproven” and that HMRC was taking a “cloak-and-dagger approach” to working with industry.

Originally, the plan was that when the software for CDS was delivered at the beginning of 2020, industry could spend the rest of the year testing it, with a view to rolling it out to customers in 2020 and 2021. However, it was then mandated that CDS would be the standard system used for Northern Ireland because it complied with the Unified Customs Code.

One of the key issues was that software suppliers, which needed to ensure traders had the right software in place to comply with CDS, did not have enough time to build, test and roll out software to their customers.