Following the decision of the British people to leave the European Union, there has been much talk regarding the nature of The UK’s trade in a post-Brexit world.
From a technical perspective, the systems underpinning customs transactions are set to change, and for the better, though ironically, this is a result of legislative changes determined within the European Union.
The UK’s current customs system is the Customs Handling of Import and Export Freight system (CHIEF). Subordinate to Her Majesty’s Revenue and Customs (HMRC), CHIEF records the declaration to Customs of goods by land, air and sea, and serves to collect customs revenues, collate trade statistics, and monitor the international movements of restricted or prohibited goods. Companies or persons seeking to import or export goods must interface with the system, with the majority opting to do this by going through one of the UK’s Community System Providers (third party platforms which record and track the movement of goods within ports and airports). Alternative options include direct manual or electronic communications.
CHIEF functions well in handling the tasks it was set up to manage. The system is aging, however, and due to the external imposition of alterations to import, export and storage procedures, it is set to be replaced. In 2014, it was announced that the EU would introduce a Union Customs Code (UCC), starting from May 2016, which will replace the previous Modernised Customs Code and therefore require updates to existing customs systems.
The UCC is intended to achieve greater consistency among EU Member States on key customs issues and to create a fully interoperable electronic customs system linking the Member States’ national systems through a single interface. Member states have until 2020 to implement the IT systems necessary to implement all UCC provisions.
As a result of these impending changes, it was deemed that a new replacement would have to take over the functions currently carried out by CHIEF, which was developed on the basis of rigid proprietary software, and is unable to accommodate the required changes within its current structure. Nonetheless, by being forced to submit to change, the replacement system for CHIEF, provisionally named the Customs Declaration Services (CDS) programme, will benefit from both technical improvements, and a reduction in cost.
At present, the legacy technology of CHIEF is maintained by Aspire, a joint venture of Fujitsu and Capgemini, which has run the system since 2010. The service contract signed by Aspire and HMRC runs until 2017, and largely motivated by the requirement to overhaul CHIEF, the latter decided not to renew the deal. Instead, the CDS programme will result in the development of a replacement system formed through a mix of internal development, off the shelf packages and external suppliers.
Moreover, at a Public Accounts Committee meeting in 2015, Mark Dearnley, HMRC’s chief digital and information officer, disclosed that significant cost savings on the new system would also be made as a result of its cloud-based architecture: “I think we talked last time [at the 2015 committee meeting] about the utilisation of our current servers being very low – about 6%. That means we can have much higher utilisation. Even more importantly, private clouds get us in the position where we can start to move workloads – move the running of the applications between different providers and different datacentres,” he said.
In its IT strategy document released earlier this year, HMRC went as far as admitting a “dangerous dependency on legacy mainframe operating systems”. The move to the cloud is expected to save around £200m a year compared to the old system, though significant transition costs are anticipated.
As such, though the eventual enactment of Britain’s separation from the EU will render the requirements of the UCC irrelevant, the shift driven by this legislation will ultimately spur the introduction of a cheaper and more effective customs handling system for the UK.
Due to the implementation time for this project following its announcement, the burdens placed upon the UK Civil Service as a result of the Brexit decision, and the uncertainty surrounding the relationship the UK will have with the EU following its departure from the union, it is highly unlikely that there will be any significant alterations to the plan regarding the CHIEF replacement. As such, CDS will be largely aligned with the EU’s UCC, given this was the purpose for which it was commissioned, though it will be a simplified version.
Source: Transport Intelligence, August 11, 2016
Author: Alex Le Roy
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)