HMRC has been criticized by parliament’s spending watchdog for failing to prepare small firms in the event of a no-deal Brexit.
Meg Hillier, chair of the public accounts committee wrote to HMRC saying that she was concerned and disappointed that little had been done to prepare businesses for the possibility of the UK coming out of the EU without a deal.
100,000 small businesses will be affected by a new customs regime when the UK leaves and tax officials have yet to identify or reach out to them.
“I am both concerned and disappointed that nearly two months on you have made little progress. You gave us no assurance that HMRC has a plan to ensure that businesses are aware of what they will need to do. We are particularly concerned about the 100,000 small traders that HMRC can not engage directly with, as you do not know who they are,” she wrote.
Will the system be ready in time?
Hillier raised concerns that the Customs Declaration Service (CDS) system would not be ready in time and that people would be expected to use CHIEF, the old system, which would further increase costs.
She wrote, “We are disappointed that despite your previous and repeated assurances about the progress of the CDS there has yet again been a slip in the timing just weeks after we last took evidence on the subject.”
A committee in September examined whether the CDS, the new digital system that will monitor goods coming from and leaving the UK after Brexit, will be ready. Delays have already pushed back the release to January, just a couple of months before the UK is due to leave the EU on 29 March.
Long delays expected at the border
The number of traders and suppliers expected to declare customs to HMRC is set to double from 150,000 to 295,000. The number of declarations is also expected to rise from 55m to 255m. However, this number is dependent on the outcome of Brexit negotiations.
MPs are generally concerned that any further delays in the development of CDS will lead to long delays at ports and airports following Brexit.
Amyas Morse, head of the National Audit Office, said that the result would be a “horror show” if officials end up having to manually process imports and exports at the border.
HMRC released a statement in response to these concerns and said that the plans are “well-developed”.
A spokesperson said: “We have always said the timeline for implementing the CDS is tight, but that we would operate the current system [CHIEF] in tandem throughout the transition.
“We have made good progress to ensure that the UK has a customs system capable of handling any potential volume of customs declarations after March 2019.”