Taxman at a loss over cause of filing disaster

The filing system went down last week on the worst possible day of the year, with the taxman in the dark as to what went wrong.

‘HMRC cannot afford to take months to work out what the problem was. It needs to pin it down quickly and make a clear statement saying what went wrong,’ said ICAEW tax faculty chairman Paul Aplin.

The failure of the systems has been a disaster for HMRC, which has had several years without serious glitches, but still faces searching questions about its IT capability.

The fear among advisers is that it was new technology implemented by HMRC rather than legacy systems that failed. If this was the case, the implication is that the technology was not adequately tested despite assurances in the Carter Review that rigorous testing would underpin the taxman’s growing reliance on technology.

The online filing system for self-assessment returns went down on Thursday morning and full service was only restored late in the afternoon, forcing the taxman to extend the filing deadline as thousands were unable to file their data.

Close to 50,000 people had to use the extra day and weekend to push through their returns.

The online filing systems for the Construction Industry Scheme, Corporation Tax, PAYE, Pension Schemes and Stamp Taxes also suffered delays, as the systems buckled under the deluge of filings.

The fault almost certainly lay with HMRC’s systems as those using third-party systems did not encounter problems.

‘It’s completely unacceptable that a State-operated system catering for the entire population can’t cope with an estimated 150,000 to 200,000 filings in one day, whereas large corporate IT systems regularly cope with volumes vastly in excess of this,’ said Baker Tilly’s head of tax George Bull.

The revelation of the delay has drawn immediate criticism. The taxman has apologised for the problems. ‘HMRC takes any disruption of service very seriously and to reflect this, it announced that no-one who files their tax self-assessment electronically or by paper by midnight Friday 1 February 2008 will face a penalty,’ an HMRC statement said.