Exclusive – OFT clears Revenue.

The Inland Revenue’s controversial attempts to introduce online self-assessment received a much needed boost this week after the Office of Fair Trading ruled the agency had not acted illegally in distributing free Microsoft tax software.

Software provider Forbes Computer Systems reported the Revenue to the OFT in July, accusing the taxman of ‘abusing its dominant position in the market’. The company had argued the decision by the Revenue to allow Microsoft to distribute its ‘TaxSaver Lite’ software free to self-assessment e-filers was ‘anti-competitive’.

The Revenue was forced to send software out to taxpayers looking to pay tax online because the application required took too long to download. More than 100,000 people have registered to use the online service and about 30,000 have filed returns online. The overwhelming majority have used the disk rather than wait to download the software, according to the Revenue.

Forbes, with the full support of accounting software trade body BASDA, had argued that if the software from the world leader was being given away free – and promoted on the Inland Revenue’s website – there would be little opportunity for other providers to succeed.

However, during the investigation, the Revenue told the OFT that IT giant EDS – previously criticised by the National Audit Office for wielding ‘undue’ influence over the Revenue – was responsible for choosing Microsoft.

Forbes MD David Forbes said he was waiting for clarification on whether he could appeal the decision or challenge EDS.

He added: ‘The Revenue has got away with the decision because the OFT said government departments are exempt from the Competition Act. If this is the case why was hearing set up in the first place?’

The official statement by the OFT, read: ‘The OFT concluded there are not sufficient grounds to suspect an infringement of competition law to justify a formal investigation into any of these complaints. In sending out the software, the Revenue is acting in an administrative capacity. The Competition Act only applies to bodies (including public sector bodies) engaged in economic or commercial activity’.

Following the launch of the OFT enquiry, the Revenue changed a page on its website to include information of Microsoft’s rivals in September.

It also changed the name of the software from Microsoft TaxSaver Lite to Digita TaxSaver Lite. Digita writes the program on behalf of Microsoft in the UK.

Basda chief executive, Dennis Keeling, said: ‘The Revenue has got off the charge but recognised the problems. The changes are not ideal but represent a definite compromise’.

Revenue reported to OFT

Online self-assessment

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