UK’s customs system would not work properly for two years in no-deal Brexit, MPs told

A 'no deal' Brexit would see the UK without a fully functioning customs system for two years, MPs were told on Wednesday.

Senior officials from HM Revenue & Customs told the Treasury committee the moment to start planning for the talks collapsing  passed months ago" in a sobering warning.

MPs heard the UK would struggle to collect tariffs properly, while the potential for traffic chaos at ports was a "known unknown".

HMRC official Jim Harra told the committee: "We would start off with a functioning but clearly sub-optimal customs border."

He added: "I think we are looking at a minimum of two years from the no deal to get to a point where you can say we have a steady-state system where we are comfortable that we can manage all the fiscal risks in a way we would like and trade can flow in the way we would like."

Jon Thompson, chief executive of HMRC, flagged up the lack of preparation for 'no deal' planning, saying: "The date for putting in an optimal customs system for the UK in the event of no deal was passed months ago."

Thompson also warned Theresa May's controversial backstop plan might not be able to be implemented until nine months after the transition period has expired.

He claimed it could take up to 30 months for the UK's customs system to be set up for such an arrangment, which would come into force in the absence of Brexit trade deal being ready to be implemented.

With the UK only signed up to a 21-month post-Brexit transition period, there is a high chance of the borders not being ready to cope with a customs arrangement which could see Northern Ireland operating a different regulatory regime to mainland Britain.

Thompson was asked what HMRC needed to do to prepare for the backstop being triggered, and said: "We would require further clarity on what is required in order for us to be able to work out what IT systems we would need to build.

"Secondly, as has been pointed out already part of that would be what IT systems would be have access to in the EU. We require clarity on both those points: what needs to be operationalised and what IT systems do we have access to."

He added: "In broad terms, if we were to make a number of assumptions we think it could be up to 30 months to do that work."

The UK and EU have the option of extending the transition period, but would need to make that decision by June 2020, and can only extend it once.