Brexit will cost Revenue and Customs an extra £200m a year

Taxpayers face a £200m annual bill for thousands of extra staff recruited by HM Revenue and Customs to deal with Brexit, its top civil servant has said.

Jon Thompson also revealed around 40-60% of his time is now spent dealing with the consequences of the vote to leave the EU.

HMRC will play a crucial role in Britain’s domestic transition to life outside the EU as it is responsible for tax, including customs duties levied on imports, and how the border works to ensure they are collected.

Asked how much time he was spending on Brexit, Mr Thompson told the Commons Exiting the EU Committee: “It’s significant.

“When I took this job the then-chancellor of the exchequer asked me to obviously, clearly, run HMRC, and then go through what is regarded as the largest organisational transformation programme in Europe, and then we decided to leave the European Union, and that was added on.

“I would guess it’s somewhere between 40 and 60% of my week.”

He went on: “We have employed 340 extra people so far and my estimate is that in the end it’ll be somewhere between 3,000 and 5,000 – probably at the upper end of that range.”

Asked about the cost, he said: “It’s in the order of £200 million extra in addition to our current budget.”

Mr Thompson told MPs he was “very confident” that a new customs system would be introduced by Brexit day in March 2019, but refused to guarantee that there would not be problems.

The number of customs declarations which HMRC must process each year is expected to increase almost five-fold after Brexit, from 55 million to 255 million, and the new Customs Declaration Service is being built to deal with 300 million.

Asked about the chances of it going wrong, Mr Thompson said: “It’s extremely low that it won’t work, but ultimately that’s why I won’t give you a guarantee, because to be slightly ‘Rumsfeldian’ about it, you don’t know what you don’t know.

“It’s £157 million technology project, it’s meeting all its milestones and targets, but technology projects sometimes go wrong for things that you don’t foresee.”