HMRC chief warns Brexit merger of UK border and tax operation is a 'mega project'

Britain's top tax body said a merged border force and tax checking operation will need 5,000 extra staff cost up £800m after Brexit.

HMRC director general of customer strategy Jim Harra told MPs the country will have to tackle 130,000 new companies that import and export within the European Union (EU) that do not currently come into contact with British customs.

Harra told the Treasury Select Committee today (14 September) a "crude extrapolation" would be that customs would need between 3,000 to 5,000 extra staff to cope with additional demand when the UK leaves the EU in March 2019.

Harra said: "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."

HMRC chief executive Jon Thompson added that the department is looking at creating a simpler Singapore-style system to allow firms to get their tax and border assessments done in one place following Brexit.

But he added taxpayers will have to stump up between £500m and £800m to get this project off the ground.

Thompson said the scheme would bring together 26 different government organisations into a "single window" where businesses could do their border checks in one go.

Mega project

The Customs boss said: "We need to be transparent with you. That is a mega project. It would take five to seven years to implement."

The meeting comes after the Government revealed its "future partnership paper" last month, which spelt out two options for long-term custom arrangements.

The more ambitious option, 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 cut deals with the EU to ease trade barriers and harness technology to avoid long queues at ports.

Labour MP John Mann pressed HMRC boss Thompson over the customs transition, saying there was "uncertainty" over HMRC's "competence and capability" for handling the radical changes on the drawing board.

Thompson admitted the HMRC did not have the money or resources at this point to tackle the shift, but there has been "extensive conversations" with the Treasury on the issue.

The customs chief added the authority may have to prioritise Brexit changes over existing projects to transform HMRC if it is to cope with Britain's divorce from the European Union.