EXCL: Trader woes – inside customs firms’ months of HMRC struggle
As work continues on the imminent switch-off of the UK’s 30-year-old customs IT platform, many of its users believed that issues with government internal systems meant that they too were facing imminent closure. PublicTechnology investigates.
The CHIEF technology platform that supports the UK’s customs system has now entered the last six months of its near 30-year existence.
The project to deliver its replacement, the Customs Declaration Service (CDS), has run in parallel for almost a third of its predecessor’s lifespan – during which time there has hardly been a day when it has not been faced with a major, and often unexpected challenge.
The most of significant of these came in light of the Brexit referendum in 2016, which took place three years after work began on CDS.
At the time of the vote, the plan was to build a platform with enough capacity to handle 100 million customs declarations annually – a figure comfortably in excess of the 55 million that were typically processed each year before the country left the EU.
Post-Brexit, HMRC expects to receive an annual total of about 250 million declarations.
But that is contingent on traders and customs brokerages being able to use the system in the first place.
PublicTechnology understands that thousands of traders may have encountered more than 18 months of difficulties in registering for the new platform – including hundreds that have been completely unable to do so as a result of HMRC’s internal systems failing to correctly update firms’ details.
It is understood that the department has diagnosed and is now fixing this issue. All affected traders have been identified and contacted and, until they are able to get up and running on CDS, will also be allowed an extension in using CHIEF beyond the scheduled cut-off date of 30 September – today – for import declarations. Export declarations are open until 31 March 2023, after which the plan is that the system will be permanently shut down.
“All of the stress and anxiety had been building up – I was even practising what I would say to my staff when I had to let them go. I felt like I had been passed from pillar to post for 10 months.”
Sarah Darby, Intercarry
While the intention is to automatically enable these extensions – which will run for at least a month – HMRC is also encouraging traders to apply to remain active on CHIEF via a specially created digital service launched last week. This online tool is part of a wider effort on the part of the department to reassure traders of a commitment that no-one will be shut out of the new customs system through no fault of their own, and that, where it is needed, help will at last be provided in making the switch.
This progress towards resolution will be welcome.
But for some it only comes after months of seeking help that was never provided, and asking questions that – with just days left until long-standing businesses were facing overnight closure – remained unanswered. In addition to the immense stress caused, those impacted now have just a few weeks to undertake up to 100 hours’ worth of training on CDS.
For hundreds of small traders, this disruption stems from the fact that the Government Gateway login system used by HMRC did not correctly update a small, but crucial piece of information: their 12-digit Economic Operators Registration and Identification (EORI) number.
Traders importing or exporting goods at the UK border – or specialist agents acting on their behalf – are required to register for an EORI number which, where applicable, simply consists of the firm’s existing nine-digit VAT-registration number with three zeroes added to the end.
Many customs brokerages are small businesses and, for those that are not VAT-registered – which is typically not required for any firm with less than £85,000 annual turnover – a so-called pseudo-EORI number, not linked to a VAT account, can be issued by HMRC.
In line with the fivefold increase in border bureaucracy caused by Brexit, many traders have seen their business expand rapidly in the last couple of years – often from single-person operations to six-figure businesses with multiple staff.
Issues have arisen where traders have registered for VAT and been issued with an updated EORI number linked to their new taxable status.
When they have then come to sign up for CDS, these firms have found that their Government Gateway account is still linked to their previous, non-VAT-aligned EORI number. This has left them unable to sign up for the new system, instead being informed during the registration process that their EORI number and their unique taxpayer reference (UTR) number did not match one another.
Reports of this issue – and of the difficulty traders were experiencing in obtaining help from HMRC in addressing it – first emerged in early 2021.
Intercarry Couriers, a specialist customs clearance firm which became VAT-registered last year, found itself in this position when attempting to register for CDS in November 2021, company director Sarah Darby tells PublicTechnology.
Immediately – and repeatedly over the coming months – she contacted various different teams at HMRC to report the issue and seek a solution.
“Most of them came back to say: ‘we are sorry that you are struggling to pay your VAT’; or ‘we are sorry that you are struggling to get an EORI number’. It did not appear that they were listening – or maybe that they did not understand,” she says.
Time passed, and the deadline of 30 September drew nearer, after which point traders not up and running on CDS would no longer be able to make import declarations.
In August, HMRC issued a press release claiming that, unless an outstanding total of about 3,500 import firms registered for CDS within two months, the UK could face “significant delays” in getting goods through border controls.
Intercarry would have been counted among those traders that HMRC was addressing when it warned that “registering takes time, so businesses should start moving to CDS to ensure a smooth transition and avoid disruption to their business”.
‘Stress and anxiety’
Darby – whose company was also receiving such warnings directly via a steady stream of letters, phone calls, and emails – was, indeed, preparing for disruption.
Still unable to register for CDS, September began with the Intercarry boss preparing for the inevitability that this would be her company’s last month in operation, after 15 years.
“All of the stress and anxiety had been building up – I was even practising what I would say to my staff when I had to let them go; I thought we were going to close,” she said. “I was losing sleep; I felt like I had been passed from pillar to post for 10 months.”
Scheduled deadline for making import declarations via CHIEF
Number of traders that had not signed up for CDS as of the beginning of August – many of which had been unable to do so
Annual turnover threshold for VAT registration – which many customs brokerages have passed as result of Brexit-related work
Length of time Intercarry sought support from HMRC in fixing its registration issues; for some, this figure may have been even longer
At this point, she “started shouting quite loudly on LinkedIn” and, finally, found “one or two people that started to listen”.
She received contact from HMRC officials working on the CDS programme, and from a dedicated complaints-handling team.
On 21 September – after 11 months of seeking help, and with nine days left until Intercarry was facing an enforced end to its business – “someone called me and said they had seen all my emails and contacts, and that they were going to make sure this gets resolved”, Darby says.
The day before this phone call, HMRC had also launched the online service allowing any firms that had “been unable to migrate to the Customs Declaration Service to make import declarations” to apply for permission to continue using CHIEF beyond 30 September.
When contacted by PublicTechnology, HMRC indicated that it was aware of the registration problems experienced by firms that have been given a new EORI number after registering for VAT. The department is now working to fix the underlying issues and said that “users will be able to continue to use the legacy CHIEF system until” this work is complete.
It is understood that those in this position identified by the department should have been automatically granted an extension – although all firms affected are still encouraged to apply via a process that asks for an explanation as to why they need continued access to CHIEF, and details of their plan for making the switch to CDS. Traders can also request their preferred length of extension, with the default being one month.
In a statement issued to PublicTechnology on Monday, an HMRC spokesperson said: “The majority of traders are on track to have migrated to CDS by 30 September 2022. We are providing a little extra time for those who have a good reason why they can’t migrate, and will ensure that there is no disruption to trade flows.”
“We are providing a little extra time for those who have a good reason why they can’t migrate, and will ensure that there is no disruption to trade flows.”
Intercarry is now signed up for CDS and, according to the company director, has also “been reassured that we will not be kicked off CHIEF until our problem is resolved”.
In the meantime, Darby has begun “cramming” in an effort to get through an estimated 14 working days’ worth training in the space of little more than a month – rather than the 11 months she would have had if she had been able to successfully register when she first tried to do so.
She tells PublicTechnology that she wants to share her experience – and its ultimate resolution – with other traders, who can be encouraged that there is some light at the end of the tunnel: even if hugely belatedly.
But, after everything she went through, Darby would still like more answers about the cause of the problems encountered by her firm – as well as potentially thousands of others.
“I have been trying to scream for this help for months – and no one knew how to help,” she says. “I do not think a lot of people realise how difficult it has been.”
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