Accountants in business and practice are well placed to appreciate the
benefits of electronic communication, notably faster messaging, quicker
solutions and lower costs.
Enlightened use of technology has brought with it a leaner, meaner approach,
with professionals expected to deliver to shorter timescales and tighter margins
without any concession on quality.
As business has become increasingly automated, so the world of IT has
developed techniques for providing the support required. Successful
organisations have succeeded in developing IT strategies designed to meet their
business needs and, importantly, the needs of those they serve.
Best practice in the management of IT projects has evolved, establishing
stringent expectations for project planning, design, systems engineering,
testing, implementation and review.
HM Revenue & Customs has been doing something else. Rather than improve
communications with business and personal taxpayers and their tax agents, it has
used technology to de-skill and de-personalise its operations. Distant call
centres have replaced the friendly face in the local tax office.
Telephone contact has largely replaced the written word, removing the
valuable shared record of what was communicated. Like Mrs Doyle, doyenne of
Inland Revenue self-assessment adverts, we could ‘go on, go on…’
Given the government’s stated commitment to electronic public services, HMRC
is under pressure to expand its e-services and encourage their wider uptake.
After all, its services impact on almost every individual and business.
Unfortunately, the impact has too often been negative. Well-publicised
failures of the tax credits system and personal tax e-filing have imposed high
costs and inconvenienced ordinary individuals.
Meanwhile, the withdrawal of stamp duty land tax e-filing hours before it was
due to go live may not have been high profile, but it was a particular concern
for the legal profession.
Perhaps worst of all was the recent payroll e-filing fiasco, which compelled
some employers and induced others to lodge their year end returns online, only
to find the systems had not been adequately tested. No organisation should
behave in this way. To crash once may be regarded as a misfortune, to crash
repeatedly looks like incompetence.
The computer failures have decimated confidence in HMRC’s ability to
administer the tax system. Recent reports suggest that the PAYE system is now
close to collapse, with many businesses unable to contact HMRC, because their
repeated calls to overstretched helplines are simply not answered.
Lord Carter of Coles, who recommended encouraging employers’ use of e-filing
in his original report, is conducting a review aimed at increasing the use of
HMRC’s key online services. His objective is to realise benefits for HMRC’s
customers and ensure sustainable and efficient service delivery, while
continuing to support compliance.
This is an irony indeed. Where is the benefit to businesses that have tried
to comply with PAYE requirements, but face penalties because HMRC’s
maladministration prevents them from doing so?
The paymaster general described the Carter review as independent, but this is
not how it is perceived in wider circles. It remains to be seen whether Lord
Carter will be courageous enough to acknowledge that his earlier recommendation
to impose mandatory e-filing of payroll returns has been discredited.
Given that some employers may have no wish or need to use computers, it
defies logic to infringe their human rights by requiring them to deliver their
tax returns online to an authority that can’t cope with them. Readers of Alice
in Wonderland may sense déjà vu.
ICAS has submitted its representations to Lord Carter a month ahead of his
deadline because its members have expressed such grave concerns about HMRC’s
Many individuals are accustomed to transacting business on the web. Taxpayers
and agents are keen to use electronic services for tax compliance, but are being
offered services they simply can’t trust. Most of our members want to use tax
e-services, but feel the existing offerings are designed only to benefit HMRC.
It’s a tragedy that so many worthy IT initiatives by HMRC have foundered, in
spite of the massive eagerness and goodwill that exists among both existing and
potential users of e-services.
Feedback from ICAS members reveals the strength of feeling on the issue: ‘The
enthusiasm of HMRC in launching half-baked systems means that the perception of
their reliability is poor.’ ‘New HMRC systems always seem to run into problems.’
‘Electronic filing has resulted in small businesses placing greater, not lesser
demands on their accountants for advice.’
The apparent lack of any cohesive strategy is the Achilles’ heel of HMRC
e-services, and many of the problems must be blamed on obvious deficiencies in
the tax authority’s IT project management.
Our concern at ICAS is that HMRC has rarely considered its customers.
Admittedly, there have been some limited consultations with representative
bodies, but these have been restricted to discrete projects and seem to have all
but dried up in recent years.
It is unclear whether Lord Carter will be forceful enough to persuade HMRC to
observe one of the basic tenets of any sound IT strategy and consult external
users about their needs.
There are significant barriers to e-filing. Tax can be complex and many
taxpayers want to help the HMRC better understand the figures by sending
enclosures such as accounts, computations and explanations with their return to
ensure full disclosure.
There are limited facilities for doing this electronically and this may
expose people who e-file to greater costs and risks of discovery assessments
than those who file paper returns.
The stupidity of designing an electronic filing system that cannot cope with
what taxpayers felt obliged to submit beggars belief. This penny-pinching false
economy actually adds to the overall cost.
ICAS wants to see a fundamental review of HMRC’s e-service strategy, and has
called for an alliance between HMRC, the taxpayer and tax agent community to
determine the future of all tax e-services. Otherwise the UK tax system may
grind to a halt.
Donald Drysdale is assistant director of taxation at ICAS
Colin responds to the call for 'Darwinism' in accountancy
Does Darwin's theory apply to taxation? Colin ponders...
Colin comments on the effect of Brexit on the influx of partners at KPMG
Colin provides insight into the Tesco and Unilever scandal over Marmite