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Will the UK’s customs computer system be ready for Brexit?

Jul 28, 2017
With the UK’s current negotiating position being to leave the EU Customs Union, one of the most important pieces of infrastructure for Irish business exporting to the UK (and the EU) post-Brexit will be the UK’s national customs computer system.
 
After Brexit, the UK’s customs system will handle inward declarations of Irish exports to the UK in addition to the transit of Irish goods travelling overland in the UK to an eventual destination in mainland Europe.
 
The UK’s National Audit Office recently published a report on the readiness of the UK Customs’ computer system for Brexit. In 2013, arising from planned changes to EU customs law, HMRC in the UK began work to replace its current computer system, CHIEF, with a new one, the Customs Declaration Service (CDS). The new system is due to launch in January 2019 – just two months before the UK is scheduled to leave the EU. The National Audit Office review found that “there is still a significant amount of work to complete, and there is a risk that HMRC will not have the full functionality and scope of CDS in place by March 2019 when the UK plans to leave the EU.”
 
Despite a year having passed since the Brexit vote, the National Audit Office has said that no changes to the scope of the new CDS project have been made, citing uncertainty surrounding Britain’s relationship with the EU post-Brexit. The current CHIEF system deals with 55 million customs declarations per year. After Brexit, HMRC estimates that the new system will need to be capable of dealing with 255 million declarations – a five-fold increase. It is also estimated that 180,000 traders will, for the first time, be using the UK’s customs declaration system after Brexit. These are big numbers.
 
The preparedness of the UK customs authority for Brexit is set to be one of the main reasons for a transitional period (or, as some Brexiteers call it, an implementation period) between the UK leaving the EU and, in fact, leaving the EU Customs Union. However, political opinion in the UK appears, at present, to be split on whether or not such a transitional period ought to be negotiated and, if so, how long any such transitional period should last. International trade secretary, Liam Fox, recently stated that obtaining a trade deal with the EU would be “the easiest in human history”. On the other hand, Brexit secretary David Davis said certain aspects of his job involved steering the UK out of the EU, telling a business conference that “half of my task is running a set of projects that make the NASA moon shot look quite simple”.
 
Work on the UK’s customs computer system will be an important one to watch over the next year or so.
 
Eoin O’Shea FCA is a practising barrister, specialising in commercial and tax law.