Leaving the European single market in March 2019 would be “catastrophic” if a viable customs system isn’t ready in time, a parliamentary select committee has warned.
In a report released on 14 November, the Public Accounts Committee said that if HM Revenue and Customs’ new customs system – the Customs Declaration Service (CDS) – or a “fall-back” option is not put in place soon “huge disruption for businesses” will follow.
The report, Brexit and the future of customs, stated that the UK’s exit from the EU could see customs declarations increase five fold to 255 million and that a failed customs system would cause “massive queues at Dover resulting in food being left to rot in trucks at the border”.
Planning for a new system started before the EU referendum in June 2016, yet HMRC will only know whether it works as intended in July 2018.
This is a month before traders will use it, resulting in a risk that it won’t be fully operating by the planned date of January 2019.
The report read: “The uncertainty regarding the outcome of UK-EU negotiations is a complicating factor but it should not be used by HMRC to avoid taking action now in areas including: scaling up the CDS service to handle 255 million declarations; ensuring a viable contingency option is in place well before January 2019; and communicating with traders.
“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. HMRC also needs to do a lot more to work with the many businesses affected. Much remains to be done to have an effective CDS in place, on time, and that traders know how to use.”
The committee will review the programme’s progress in summer 2018 following a further review by the National Audit Office.
Andy Tompsett, head of UK for sales and product at Merc, warned that such disruption would push the menswear brand away from European business:
“It wouldn’t affect what we bring in from China, but it has a lot of implications for what we bring in from Portugal – delays at Calais would be a huge headache, and a major concern.
“It’ll push us towards doing more in China and Bangladesh and away from manufacturing in Europe. We’ve got to work ahead of time, and that way we won’t be so affected, which is a negative thing.”
A supplier to British brands, meanwhile, said it’s a waiting game:
”We’re all new to this, and as years of working together changes overnight, it will be a headache - that’s the bottom line.
“I think it’ll sort itself out and the government will step in as if they look at the clothing industry, it’s a billion-dollar business. We all know they’re working on [the new customs system], but on what time scale? Everyone in the industry is asking the same questions.”
A chief financial officer at a value clothing retailer agreed: “If there is cause for concern we’ll make sure to bring in our stock in good time, but in the mean time we’ll just have to put our faith in HMRC to sort it out.”