HMRC must grow 'intelligent client' function to sort out post-Brexit tech issues – watchdog

The UK's public spending watchdog is warning that the nation's tax collector needs be become an "intelligent client" in its handling of tech service providers contracted to create a "single trade window" for post-Brexit border arrangements already beset with delays.

HMRC has contracted Deloitte and IBM to realize its plans for the "single trade window" (STW) to replace a patchwork of systems managing and recording cross-border trade.

In a report published today, the National Audit Office said the program's objectives and timescales are "overly optimistic and continue to underestimate the complexity of what is required."

Thew program has already fallen several months behind the timetable set out in HMRC's previous February 2023 business case, the NOA pointed out.

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Following the UK's practical departure from the EU at the end of the 2021 transition period, open border arrangements with the EU, by far the nation's largest trading partner, came to an end, although full border controls have been delayed five times since.

The STW will be relied upon across government, managing data between ports, private sector traders and intermediaries and more than five government departments including HMRC, the Home Office and the Department for Trade and Business.

HMRC said it would build the STW in stages where Deloitte and IBM would complete a new release every six months. "The February 2023 business case stated that an initial strategic release providing the foundations for the system would be delivered in November 2023, to be followed by further strategic releases every six months that would add more functionality. HMRC has since revised its plan, with a public beta release now scheduled to take place in summer 2024," the NAO said.

Meanwhile, the business case released in March 2024 did not commit to milestones for the delivery of future strategic releases but did "specify the functionality that will be delivered incrementally by 2027," the NAO said.

Adding to the challenge of building the STW is the fact it will be software-as-a-service from the start, with the technical partners designing, building, testing and running the service on behalf of the government.

"The contract specifies that the government will receive any specific intellectual property created and that the [Technical Delivery Partner] should develop a solution that can be effectively competed when the contract ends. Meanwhile, HMRC will be responsible for setting service standards, approving deliveries and monitoring service performance. The HMRC team will need to develop an intelligent client function to oversee the work of the [Technical Delivery Partner] and, once work is complete, ensure continuity of service after its contract ends," the NAO said.

HRMC's track record as an "intelligent client" regarding cross-border trade is open to question.

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The UK had relied on a patchwork of systems to check goods at the border and record information required by customs and traders. Among them was CHIEF, a system introduced in 1994, which was set to be decommissioned in 2019, and then again in 2023. The delays resulted from setbacks in building its replacement, IBM's Customs Declaration Service, which took 10 years to complete. In the meantime, Fujitsu was handed a £168.8 million ($214 million) contract to keep the old system up and running. CHIEF is now set to be retired after the June 4 this year.

The UK government expects its complete cross-border arrangements to cost £4.7 billion ($6 billion) across the 13 most significant programs. The NAO said the cost to businesses of cross-border trade with the EU, estimated at £7.5 billion ($9.5 billion) in 2019, has not been updated since. ®