If Britain doesn’t introduce a new customs system by the date of Brexit in 2019, there could be mass disruption for businesses and food being left to rot in trucks at the border, a report has warned.
The number of customs declarations which HM Revenue and Customs process each year could increase almost five-fold from 55 million to 255 million after the UK leaves the EU.
But HMRC does not yet have the funding to increase the capacity of its new Customs Declaration Service to deal with the consequences of Brexit, The House of Commons Public Accounts Committee committee said.
Its report warns that ‘much remains to be done’ to have an effective CDS system in place on time.
It also urged the Treasury to ensure that funding is in place to develop contingency plans to avoid gaps in the service.
If the CDS is ‘not ready in time and if there is no viable fall-back option’, it would be ‘catastrophic’, the cross-party committee concluded.
The committee’s chairwoman, Labour MP Meg Hillier, said: ‘Failure to have a viable customs system in place before the UK’s planned exit from the EU would wreak havoc for UK business, trade and our international reputation.
‘Confidence would collapse amid the potentially catastrophic effects.
‘HMRC is under considerable pressure to deliver the new Customs Declaration Service in time, but it does not yet have funding to increase the capacity of CDS to deal with the consequences of Brexit – nor to develop contingency options.
‘This is deeply worrying. HMRC requires a relatively small sum to upgrade the current Chief (Customs Handling of Import and Export Freight) system – a move which would provide some peace of mind to traders, many of whom are still operating with limited information and in great uncertainty.
‘HMRC tells us it is merely ‘in conversation’ over Chief upgrade costs when, on behalf of business and the British public, it should be banging on the doors of the Treasury.
‘HMRC must press the case to secure this funding now and ensure that, if other plans fail, customs will be fit for purpose.’
The report described the introduction of CDS as ‘a programme of national importance that could have a huge reputational impact for the UK if it is not delivered successfully’.
It warned that using uncertainty over the outcome of Brexit negotiations as an excuse to hold back from action would not work.
The report warned: ‘There are financial as well as operational implications of not acting now. This is a tight timetable at the best of times. With the hard deadline of Brexit, delay is not an option.
‘The Treasury needs to ensure there is funding in place to develop contingency options so that there are no barriers to continuity of service. HMRC also needs to do a lot more to work with the many businesses affected.
‘Much remains to be done to have an effective Customs Declaration Service in place, on time, and that traders know how to use.’