The UK government will face “significant challenges” in preparing the country’s borders for the introduction of full customs controls on EU imports next year, the government spending watchdog has warned.
In a report on the state of UK borders after the Brexit transition period, the National Audit Office said the government would need to work hard to make ready port infrastructure and educate EU traders on the new controls.
While the EU introduced full border controls on UK exports to the bloc from January 1, the British government has three times delayed instituting its own checks in order to avoid delays at British ports.
“The government has [been] prioritising [trade] flow over compliance. However, this cannot go on indefinitely. The current overall operating model for the EU-GB border is not sustainable,” the watchdog warned.
The UK government has said it will start to introduce checks from next January, when importers will be required to fill out import declaration forms on products coming from Europe. EU exporters will be required to supply other paperwork, such as export health certificates, from July.
While congratulating the government for a “significant achievement” in avoiding the worst-case scenario of long border queues last January, the NAO warned that the delays in instituting border checks were increasing the risk of trade disputes, smuggling and health issues.
“Repeated delays to putting in place an effective border regime also leaves the UK open to potential challenge that it is not complying with international trading rules, and more likely that gaps in border controls could be exploited,” it said.
The NAO said pre-Brexit forecasts from the Office for Budget Responsibility, the UK’s fiscal watchdog, showed that a porous border could cost the exchequer up to £600m in unpaid VAT, £100m in lost alcohol and tobacco duties, and £200m in lost customs duty.
However, the new controls will increase paperwork and the strain on UK computer systems. Between January and August this year some 48m customs declarations were made by traders to HM Revenue & Customs, but these were expected to increase “significantly”. HM Revenue & Customs said it had increased the capacity of its main Customs Declaration Service (CDS) system from 60m to 200m declarations a year.
In evidence given to the NAO, the British International Freight Association said “lots of goods, including foodstuffs” were being brought into the UK without the required declarations.
The lack of data from full border checks was storing up multiple risks, the NAO said. “The longer that import controls are delayed the longer it will be until [government] departments can use this new information to effectively target risks, such as those relating to smuggling and food safety.”
The report also warned that the government faced “a more significant challenge” in getting EU companies ready for the new controls. The NAO said a lack of preparedness among EU hauliers and traders remained a “significant risk” and warned that if they “consider that exporting to the UK is too onerous to be worthwhile, this could reduce the flow and availability of food and other products to the UK”.
Meg Hillier, chair of the House of Commons’ powerful public accounts committee, said leaving the EU had put additional costs and paperwork on UK businesses that EU exporters sending goods to the UK had not had to suffer.
“The delayed rollout of full import controls means it’s still not a level playing field for some UK businesses,” she said. “Government must help businesses adapt to the new rules and put in place border controls that work for all.”
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