Delivery of HMRC's project to replace CHIEF customs system has been branded 'in doubt' - Photo credit: HMRC

The House of Commons Treasury Committee has expressed concern that confidence in HMRC’s ability to successfully implement its updated customs IT system has “collapsed” - and that it might not be ready in time for when the UK leaves the European Union.

The UK’s tax authority is replacing its existing - but outdated - customs IT system, Customs Handling of Import and Export Freight (CHIEF), which records and automatically checks declarations to customs of goods by land, air and sea electronically.

CHIEF - which is the main declaration processing service of a total of 57 border systems - deals with more than 60 million declarations a year.

The new system, Customs Delivery Service, is being built to handle the much higher volumes expected after the UK leaves the EU - declarations are expected to increase by 90 million to 390 million a year.

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According to correspondence between the committee chairman, Andrew Tyrie, and the director general of HRMC, Jim Harra, the project was rated ‘green’ - meaning it was “successful and on time” on 25 November 2016.

However, by 31 January 2017, this dropped to ‘amber/red’, which means that delivery was “in doubt”, and that there are major risks that need “urgent action”.

Harra acknowledged in a letter dated 21 February that the timetable for implementation was “challenging” but that it was deliverable.

“CDS implementation is a large and complex programme, including interfaces with external and internal 2 systems that need to be developed and for this reason our assessment is that the progress is Amber/Red pending further progress,” he said.

Harra also emphasised that the tax authority was “prioritising delivery of CDS for Day 1 of the UK leaving the EU” and that it would be implemented in a phased-roll out, with all customers usnig it by January 2019.

He added that the CHIEF system could be operated in tandem with CDS during the transition if necessary, and that there was a technical upgrade planned to the current system to increase CHIEF’s stability and capability. There are also manual fall-back procedures, Harra said.

But in a statement published today (31 March), Tyrie emphasised the importance of a functional customs and export service ahead of the UK’s exit from the European Union and indicated the committee would watch the project closely.

“Customs is at the heart of the Brexit debate. It is part of the essential plumbing for international trade, and ensuring it continues to function smoothly post-Brexit has to be a priority for the government,” Tyrie said.

“The CDS is needed in order to handle a possible five-fold increase in declarations that could occur when the UK leaves the EU. The consequences of this project failing, or even being delayed, could be serious. Much trade could be lost. The project, therefore, merits a high degree of scrutiny by parliament.”