HMRC bets the farm on digital. What could possibly go wrong? HMRC has promised to throw £1.3bn at its creaking IT to transform itself into the most "digitally advanced" tax administration in the world. By doing so, it also hopes to save significant piles of cash and offset major cuts. But for many, this whole venture represents a major gamble. To much fanfare the department announced …
'Management' consultants are frequently used to provide justification or a CYA smoke screen for decisions already taken. "We're sorry this project failed so catastrophically, but we got in this very expensive chap in a shiny suit from a big name consultancy, who said it would be fine, so it's not our fault."
Easy to fix though. Anyone associated with the project caught trying to arrange a meeting should have their account revoked. Soon you'll only be left with the technical workers and not enough of them to design by committee. The project will be completed in record time :)
> HMRC has promised to throw £1.3bn at its creaking IT to transform itself into the most "digitally advanced" tax administration in the world.
In a work of PFI genius the HMRC's offices were all sold to a company head-quartered in a Bermuda tax haven. This company then leased the offices back to HMRC for 20 years.
The lease ends in about 5 years. Once it's up the HMRC can a) pay a prohibitive rent on their offices, or b) leave.
They literally have to go digital as they are about to be kicked out of their own offices...
You need to either have gone to school with some of the management, have done well at talking shite to get yourself into a position you know nothing about, or work for a company a minister fancies a directorship with when he/she gets kicked out of office.
Those are the usual routes.
I still don't understand why I have to fill in a tax form (whether on paper or online) at all when I am resident in the UK, I get employment income from a UK company that is taxed before I see it, small amounts of share dividend income from UK-listed shares that is taxed before I see it, interest on accounts is either tax-deducted before I see it or is tax-exempt (and officially registered as such), so WTF is all this form-filling actually doing? And there I mean 'that is of any use'.
Their staff must be on well below minimum wage if there is actual cost justification for people like me having to do this.
They are saying the new system will automatically record personal tax-paid interest on savings - which seems long overdue. It is to be hoped that they will also link up tax-paid dividends and Gift Aid claims from charities.
It should be possible for HMRC to avoid the ordinary higher rate PAYE tax payer having to do anything to balance out those various tax avenues. At present it takes months of aborted phone calls and unanswered letters to get the necessary simple paper P810 form to fill in and return. The completed form is apparently then read by a machine.
Britain has probably the most complicated tax code in the entire world. This is what actually needs reforming; not the collection mechanism, but the hugely unnecessary bureaucratic bloat that makes actually working out who needs to pay what so bloody difficult.
A good example of this is the duties on drinkable alcohol. Currently there are sixteen different duties levied on alcoholic drinks, varying with type, concentration in the final product and so on. These could be replaced with just one duty on the actual ethanol in the drink, thus simplifying the entire thing.
This sort of bloat is evident everywhere in the UK's tax code. Huge numbers of pettifogging rules merely give tax avoiders more places to hide. The answer is not more rules, nor is it an unenforcible General Anti-Avoidance Rule, but instead streamlining the ruleset and reducing the number of different taxes.
"Britain has probably the most complicated tax code in the entire world."
I doubt it. For sales tax you cannot be the good ol' US of A. In the UK it is 20% on most things, with some things such as bicycle, helmets, loft insulation and helicopters being at other rates. The US has state, county and city sales taxes, each at different levels and each on different things.
>>"Britain has probably the most complicated tax code in the entire world."
>I doubt it.
Absolutely. Anyone (here) in the UK needs to observe the US systems of taxation to believe it. For example people in New York have three sets of income tax to deal with (City, State, Federal). Also, everyone gets to do the equivalent of self-assessment over there. The concept of PAYE normally gets Yanks dribbling at its simplicity for the employee when explained.
Now on consumption style taxation, they are also pretty adept at phenomenal complication. For starters, in the UK, notice how the price on the ticket in a shop is what you pay (unless you haggle it down.) It says £4.99 and you pay £4.99. As DavCrav points out, in the US you have to mentally allow for between 0 and 2 digit % sales tax, depending on where you are and what you are buying.
You only need one type of tax if you are prepared to be awkward enough about it
http://www.hmrc.gov.uk/manuals/vclothingmanual/VCLOTHING3100.htm
And although the consumer may not notice VAT, businesses do. There is probably not a pet shop in the land which correctly accounts for the VAT on every item they sell, since feed etc for working animals is zero rated while for pets, goods are standard rated.
As for yanks dribbling at the simplicity of PAYE *for the employee* - well, yes. If it's done properly. (Google NPS and Dave Hartnett, or ESC A19 for examples of when they didn't). But it is still a right royal PITA for businesses. (Google RTI Accountingweb )
And we have tax elections driven by the phase of the moon, not to mention the joy of devolution. And we're the only country in the world to run their tax year non-coterminous with a calendar month. The idea of accounting for VAT (monthly/quarterly annual), CIS (ditto), PAYE (Ditto plus every time you run payroll... which is daily for pension providers) CT (annual) NICs (weekly) and SMP/SSP offset (take your pick) in one place.... Yep, this is all arse about face.
Its hard to replace the IT and processes, because the system itself is too complex and as soon as you get into business tax there are "agreements" that dont always have solid business rules that can be included in code.
If the UK wants most tax automated, it has to change the taxes (or at least most of them) themselves to be automatable in the first place. Note that the rules change on a far more frequent basis than any replacement project is likely to take to design, let alone deliver.
HMRC also doesn't like to make its own rules, it delegates that to the courts too, especially if circumstances dont tick boxes clearly.
A new money pit for a new consulting firm incoming
Maybe they should simply buy a new complaint handling system, and answer the phones in a reasonable time.
I was around the HMRC account when the ASPIRE bidding process was underway. Both EDS and CapGem/Fujitsu knew that this would be a huge money maker that would be difficult for HMRC to get out of, even though one of the requirements was to show year-on-year cost savings to HMRC.
Now it's costing HMRC £20M to find out how to get out of their contract at least three years after it was supposed to end.
I am truly amazed that these people are allowed to dress themselves, let alone run HMG's tax collection.
During my tenure there, all the IT staffers (HMRC & EDS, Cap etc) knew and accepted that everything about the account was the worst possible value for the taxpayer. And not one fuck was given...
Anon, cos I might go back there (£££)
Not improved in there. Was recently brought in to provide some IT support for them via one of the Blue Chip providers they use, my time was being billed directly to HMRC with a no doubt large markup, and yet they had me literally sitting around surfing the web without any work to do for the vast majority of my time there. Out of several months with them I think I put in maybe 2 days work, and that work could have been done by any idiot with the ability to copy and paste. I couldn't get out of there fast enough, so much so that I actually ended my contract early, something I had a long standing personal policy of not doing.
On the plus side, I had time to learn some new technologies, which came in useful for the next contract. Thankfully they allowed personal laptops.
Anonymous, as it's conceivable I might be forced to work there again if the market for my skillset dries up again.
>> The Government Digital Service's Verify system only works for textbook self assessment users with an established digital footprint. It will not authenticate businesses, or third parties, such as accountants. <<
The issue of providing access to third parties is an authorisation problem, not an authentication problem. I think Verify is an authentication system, and I'd assume HMRC could implement a "delegate certain rights to my accountant" function within their own systems.
"Authenticating businesses" is an odd concept. People work in businesses, and each person has a distinct identity. Having generic organisational logins sounds like a bad idea.
It may be that there is a requirement for someone to have a "professional" identity distinct from their "personal identity", but I don't imagine there's anything in Verify preventing that.
Happy to be corrected by better-informed commentards.
I used to sleep during the day* in a very large organisation that got itself in a very knicker-twisted situation over the very set of circumstances john latham describes. It was never quite realised that even in the simplest case, ie some customers had a personal accountant (accountant being a sole trader not a partnership), that accountant might well have an assistant of some sort (personal assistant, junior accountant, etc) who might want to contact {org where I worked} to make enquiry. Danger will robinson - strict confidentiality provisions on info held by {org}, but update info surprisingly not so dangerous as revealing customer info. As jl says, who had the virtual credential? The 'owner' of the practice, the practice itself, each case officer in the practice? Each had its drawbacks and complications. A major accountancy or legal partnership had even more permutations of horror once their internal staff turnover got factored-in.
An extra complication - while accountants themselves tended nit to be customers of {org}, if they had a children then their spouses tended to be customers. So we had records of accountant/staff/ etc *in their own right* as well as in their professional role. Keeping those different functions separate was its own nightmare.
My personal solution while working there - avoid anything to do with nominees, powers of attorney, accountants, public trustee etc. Trying to point out the difficulties was like banging ones head against a wall. Providing solutions was not always welcomed.
* some readers may spot the Jerome K Jerome 3 Men in a Boat reference
Two other things to worry about: the introduction of the Scottish Rate of Income Tax means that somehow a unitary and creaking tax system is going to have to work with different tax rates depending on where you (say you) live.
...and then there's discussion of introducing a local income tax to partly replace Council Tax.
Who thinks the system can cope?
No one has a fucking clue so they picked the biggest fee possible.
That will be spent on a massive team pissing around pretending, delivering whats on paper. But as they never had a clue in the first place, the requirement on paper will be a mess.
Having achieved and delivered this mess they will plod on for another 5 years with the current system, likely spending another 1.3BN paying those pretending to fix shit.
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