UK software supplier Agency Sector Management (ASM) has told HMRC it could not provide supporting software for the Customs Declaration Service (CDS) on shipments in and out of Northern Ireland by January.

Coming just days after an EU goods sub-committee was informed by industry experts that the system was “not fit for purpose”, the decision by ASM raises fresh concerns over government’s “unnecessary insistence” on pursuing the switch to CDS.

In a letter to HMRC CEO Jim Harra, ASM chairman Peter MacSwiney said his team had “no realistic chance” of releasing a CDS-compliant solution by 1 January.

“When it was announced that CDS was the intended solution for delivery of the Northern Ireland Protocol and would be required to go live on 1 January 2021 we undertook a review of our readiness for that date,” said Mr MacSwiney.

“We established with an amount of de-scoping it was possible we could have a rudimentary solution available for supplementary import declarations towards the end of the year.

“We had no possibility of inventory linked import or export functionality being available, as there are significant gaps in some aspects of required functionality from both the community service providers and the core HMRC CDS system.”

Mr MacSwiney also said there were “blocking issues” on export declarations, revenue-creating import declarations and export dual-running when CDS and the existing CHIEF system are in use.

While HMRC is providing technical support for those trialling the system, Mr MacSwiney questioned its ability to scale this up, stressing that handling “a few thousand declarations a month” is very different to the expected million-plus after Brexit.

“CDS is not only a change of computer system it is a change of data elements and customs regulations,” he added.

“It is not widely understood among our users, who are predominately intermediaries; and is even less well known among the end users – importers and exporters – required to provide the additional data required.

“Relationships with intermediaries and customers are based on electronic data exchange, so any changes in what is required may involve changes to both of their internal systems.”

With such changes typically taking up to 18 months, Mr MacSwiney said it was “totally unacceptable” to mandate CDS without any workable contingency plans.

Amid the concern over CDS being ready for 1 Janaury, former head of the UK Rail Freight Group Tony Berkeley recently asked the panel of the EU goods sub-committee if such a contingency existed.

Director general of the UK Association for International Trade Des Hiscock said the existing CHIEF system was the fallback that government and HMRC should now turn to.

Mr Hiscock noted that efforts had been made to substantially increase CHIEF’s capacity to be able to handle the expected surge in volumes, adding that with this system ready meant it “made no sense” to pursue the under-developed CDS.

Mr MacSwiney told The Loadstar that, while it was that true that presently CHIEF was unable to handle dual-use tariffs that will apply for Northern Ireland, “adapting CHIEF to handle dual-tariffs would not require any substantial technological feat”.

“I think it would be an out-of-the-box solution and it would dramatically cut the risk we are expecting from CDS,” he added. “You cannot continue to push CDS, try it and then roll things back to CHIEF when CDS fails. CDS is simply a solution to a political problem.”

Mr MacSwiney said the “spectre of paralysing” Northern Ireland’s trade was real, and ASM did not believe HMRC would be able to mitigate this to an “acceptable level”. He urged HMRC to look at alternatives, using CHIEF.

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