The United Kingdom’s journey towards a modern declaration management service
Head, Business Transformation and Customs Service
Her Majesty’s Revenue & Customs (HMRC)
Courtesy of the World Customs Organization – original article published in WCO News magazine
As far back as 1971, Her Majesty’s Customs and Excise (HMC&E) – as it was then – was looking at how computers could be beneficial to the Customs process.
The growth in air traffic and the need to clear goods quickly in the United Kingdom (UK) prompted the development of the London Airport Cargo Electronic Data Processing Scheme (LACES). It was originally an automated system for processing import consignment data, and was the world’s first Customs computer service.
An in-house information technology (IT) development initiative along similar lines, but for the maritime environment, followed in the mid-1970s, and in the 1980s the Departmental Entry Processing system (DEPs) was delivered in partnership with the National Data Processing Service (NDPS). The latter introduced direct trader input, and a new kind of customer service.
Customs experts could help customers by logging on to their terminals and helping them to overcome validation failures by watching their data inputs in real time, and providing advice. In-house technical staff developed and managed the Customs processing programs while NDPS staff handled the airport and commercial services, as well as having responsibility for operating and managing the infrastructure and network. Both teams were housed together in a location near Heathrow Airport.
The maritime port community followed suit, building and developing port systems to interface with DEPs, which also influenced the development of Customs systems across the world. During its lifetime, many Customs authorities from across the globe visited the UK, wanting to see demonstrations of the system to inform their own digital developments.
The Customs Handling of Import and Export Freight (CHIEF) system was developed in the 1990s to replace DEPs, and to accommodate a European Union (EU) directive. It changed the way that UK Customs captured and processed Customs declarations. CHIEF represented a complete transformation of the way HMC&E interacted with customers, and is still in use today. International trade is dependent on the fast flow of goods, and CHIEF was designed to process a declaration and then provide a response back to the customer within five seconds. The process involves:
- Validating more than 50 data items;
- Determining the liability of goods to Customs and excise duties and value-added tax (VAT), as well as prohibitions and restrictions;
- Calculating the value of goods, and the revenue to be charged;
- Risk-assessing the declarations made in respect of goods;
- Automating the payment and collection of duty;
- Notifying the customer that their goods have been released from Customs control.
As part of the development of CHIEF, a Management Support System (MSS) was created. It was the first departmental data store that enabled business users within the Department, rather than technicians, to undertake their own real-time data enquiries via a user-friendly reporting tool. For the first time, there was access to four years of Customs declaration data to help:
- Inform the picture of risk;
- Improve operational performance;
- Improve the deployment of resources;
- Aid policy development.
CHIEF is certainly a complex IT tool. It has many links to the systems of other government departments (OGDs), and also to a range of Community System Providers (CSPs) – trade systems at ports and airports. In fact, CHIEF currently:
- Accepts 99.8% of import and export entries electronically;
- Processes more than 67 million import and export declarations a year;
- Calculates – and reports to accounting systems – revenues totalling 34 billion British pounds a year;
- Risk-assesses Customs declarations against other available information, selecting around 400 for physical examination and 15,000 for documentary examination a month;
- Processes more than 350,000 OGD import and export licences a year;
- Provides import and export data for the UK’s Office for National Statistics.
However, the current CHIEF system has now been in operation for 23 years, so it is based on ageing technology. As such, it is becoming more complex and costly to maintain, and as EU legislative changes are on the horizon in 2016, there is a need for an update. Her Majesty’s Revenue and Customs (HMRC), one of the successors to HMC&E, is implementing that change by bringing in the Customs Declaration Service (CDS), which will provide UK and international businesses with a more modern, effective and efficient digital service for managing Customs.
CHIEF enables international businesses to trade with the UK, contributing to the government’s growth agenda for the economy. The CDS will deliver the same service, but will also offer additional capacity for the declaration system to grow, in line with the government’s plans to increase the value and volume of international trade.
The CDS will also provide a platform through which the EU’s Multi-Annual Strategic Plan (MASP) can be delivered; at present this includes 28 specific projects, at least 15 of which will have an impact upon HMRC’s declaration processing capability. To amend the existing CHIEF system to accommodate the MASP changes would incur significant costs, so there is a sound financial case for the CDS.
Bringing the accounting for the 34 billion pounds of Customs duty, excise duty and import VAT onto the Enterprise Tax Management Platform is in line with HMRC’s IT and financial system strategies. Moreover, the CDS will fit in with HMRC’s compliance strategy and the UK Border Force’s operational strategy by building an integrated risk engine for international trade and taxation. This should enable better targeting of interventions as goods cross the UK border, and improve the strike rate.
HMRC and the CDS are in a primary position at the border to support a collaborative approach with other departments and customers. Digital technology can help to build connectivity between departments, agencies and industry, thereby improving interaction with OGDs, and facilitating the planned delivery of the UK’s ‘One Government at the Border’ vision.
The ultimate goal is to update CHIEF to a modern declaration management service that fits with the international trade environment of the 21st century. The government’s ambition is to grow the UK economy by attracting more inward investment, entrepreneurs and innovators, and to increase UK exports significantly. The CDS will help to achieve the government’s ambition by reducing the cost and administrative burden of doing business in the UK, delivering an efficient, digital solution for declaration management.
To get there, HMRC is setting up ‘discovery teams,’ made up of representatives from the Department’s Chief Digital and Information Officer’s team, as well as testers, businesses, and suppliers. The discovery teams will work in two-week blocks, delivering a section of the project each time. User stories, collaboratively developed with a wide number of Customs’ trade partners, will also form the basis of the development.
The delivery plan for the CDS though is an ambitious one. HMRC aims to have a live service available to test in 2017.
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