Britain’s tax authority said a single operation for carrying out border and tax checks could cost the taxpayer up to £800 million as it warned that 5,000 extra staff may be needed to cope with Brexit.
HM Revenue and Customs (HRMC) has told MPs it is looking into creating a Singapore-style system that could make trade simpler for businesses by allowing them to get their tax and border assessments done in one place.
HMRC chief executive Jon Thompson said he is investigating the “business case” and had hired the team which delivered the Singapore project, but said the Treasury would have to stump up between £500 million and £800 million to get it off the ground.
Speaking to the Treasury Select Committee, Mr Thompson said it was “conceptionally possible” for the Government to bring together 26 different organisations into a “single window” where businesses could do their border checks in one go.
He added: “We need to be transparent with you. That is a mega project. You need to be thinking about that as a project that costs somewhere between five to £800 million.
“It would take five to seven years to implement. We have been asked to look at whether there is a business case for that because there would be a noticeable change to GDP in my opinion.
“It would make it much smoother to import and export if you only had to go to one place instead of multiple different Government departments.”
The meeting comes after the Government revealed its “future partnership paper” last month, which contained two potential options for long-term custom arrangements.
The more ambitious option, described as “innovative and unprecedented”, would see Britain “mirroring” Brussels tariffs for goods that will eventually enter the EU to avoid the need for a UK-EU customs border.
Alternatively, a “streamlined” approach would see the UK negotiate agreements with the EU to reduce trade barriers and harness technology to avoid long queues at ports.
HMRC told MPs on Thursday that in a “crude estimate” it could require an additional 3,000 to 5,000 people by the March 30 2019, to meet the increased custom demands posed by Brexit.
Jim Harra, HMRC’s director general of customer strategy, said the organisation would have to deal with an additional 130,000 new companies after Brexit that import and export within the EU but do not currently come into contact with British customs.
He said: “It is based on a crude extrapolation. If your customs declarations are multiplied five fold, if you multiplied your resources five fold, what would that come out at. It would come out at an extra three to 5,000 people.
“Do we believe that is what we really need? No, I don’t think we do, because we know that even if the number of declarations grow a large number of those will be made by existing international traders whose compliance we already manage.
“On the other hand there are probably about 130,000 new businesses that will be dealing with customs for the first time and there is a big challenge in reaching them, supporting them and getting them to be able to comply with their obligations on a transitional basis as well as on an ongoing basis.”
Labour MP John Mann pressed HMRC chief executive Mr Thompson over the customs transition, saying there was “uncertainty” over HMRC’s “competence and capability” for handling the change.
Mr Thompson said HMRC did not have the money or resources at this point to tackle the shift, but “extensive conversations” had been had with the Treasury on the issue.
He said the authority may have to prioritise Brexit changes over existing projects to transform and improve the HMRC if it is to cope with Britain’s divorce from the European Union.