I am not a fan of HMRC's plans to digitise tax services. I note I am not the only one with doubts. The Office for Budget Responsibility looks at government plans and attaches a risk rating to them. When looking at this plan they used this model for risk assessment (I stress, this is an example and does not apply to this project fro which the grid is not published):
Having used this grid they then commented:
Making Tax Digital: reducing errors through record keeping: This package receives a ‘high' uncertainty rating. It is an HMRC initiative to interact digitally with small businesses across income tax, corporation tax and VAT, working with the private sector to introduce software that will design out record-keeping errors in taxpayers' returns. There are uncertainties in the behavioural response and operational delivery. In terms of behaviour, the uncertainty relates to the extent to which the software will prevent errors by taxpayers; in terms of deliverability, the uncertainty relates to whether HMRC can deliver this challenging project in time for the benefits to be realised as scored. Reflecting lessons learnt from previous costings (as described later in this annex), we paid particular attention to the degree of contingency built into the delivery plan before certifying the costing as central.
So, the project gets the second highest risk assessment.
That is unsurprising. Firstly, it is obviously misdescribed: this project is not about eliminating book keeping errors. It is ludicrous to claim that it is. It is about getting data to bring forward tax payments with an indifference to whether the payment demanded is right or not. That is why I so object to it.
The comment on behavioural response is interesting though. I suspect this move will massively increase the attractiveness of the shadow economy. It will significantly detract from the appeal of running a business.
And bluntly, if existing systems do not work (and I have shown to day that they do not) then this one will not either, and the delivery timescale is ludicrously short.
So the OBR are right to worry about cost over-runs.
My only concern is that they have seriously understated the risks because the project has been incorrectly represented to them. And that deception may tell us a great deal about what all this is about.
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In five years time the STEPS contract with Mapeley comes to a close. HMRC will no longer have any offices – except ones it pays high market rent for.
Hence the (perhaps another) reason to move to digital.
See Private Eye 1407 (the latest) Page 37.
Good point
I was struck by this part of the extract you quoted from OBR’s report:
“working with the private sector to introduce software that will design out record-keeping errors in taxpayers’ returns”
I agree with you that the whole project is misconceived, and this quote suggests an additional potential flaw in HMRC’s plans if they are intending to encourage the use of proprietory software in this highly sensitive area. One of the very few sensible things the coalition government did was to commit to using open source software wherever practical in government offices. Although they were probably motivated mainly by cost, and may only have contemplated replacing elements of Microsoft Office, there is a problem with relying entirely on proprietory (closed source) software, which is generally harder to fix if it fails to “design out .. errors” or even introduces them, and which may incur delays in fixing security holes.
Hopefully this will turn out to be only a hypothetical concern.
On tax returns they allow many submitters
As soon as I read about this plan, my immediate thought is which accounting software company have they done a deal with, Sage or Intuit or is there some new startup created by a Tory Donor. This was before I read about the private sector involvement.
The Self-assessment gateway works and continues to work because it is well designed, well provided with network resources and everyone knows how to use it. GDS design guidelines have led to some look and feel changes but not overwhelmingly different.
But if you force everyone to use an accounting system that is closed source and unusable by the majority of users and you break the whole system. Sadly, unlike Universal Credit which is a much publicised systems and software car crash, scalable systems to interface with proprietary software should be fairly simple to implement and easy to tie people into to make it a cash cow for some lucky company.
Any forced link would be a licence to abuse