It is time for the leaders of Her Majesty's Revenue and
Customs to spell out some home truths to ministers and opposition
politicians. The staff and systems at HMRC cannot cope with more
rapid change.
With the Budget fast approaching, government and opposition must
be made to face up to the reality that business faces every day: it
is no good launching new products or services if your systems
cannot support them.
For too long ministers have announced initiatives and pushed
through legislation without consideration of the processes and
technology that underpin them.
Two major reports last week - from the National Audit Office and
the House of Commons Public Accounts Committee - spelt out the
challenges facing HMRC.
You have to dig deep into the National Audit Office report into
the national insurance account to get an insight into the
difficulties faced, but the grim truth is there. The National Audit
Office found errors in up to 1.6 million accounts relating to
incapacity benefit, including some dating back to 1998.
HMRC has more than 100 million items relating to employers'
end-of-year PAYE returns in "suspension files" because the
information cannot be properly reconciled against individuals. Not
all of these are due to IT-related issues, but the problem has been
growing, not diminishing, in recent years.
The Public Accounts Committee report, on the filing of income
tax self-assessment returns, also presents a picture of systems
under strain.
HMRC made errors in processing 500,000 tax returns. The
accuracy rate of its PAYE coding is just 73%, so two million UK
workers have the wrong tax code.
If that weren't enough, HMRC is also embroiled in the ongoing
Tax Credits fiasco.
However, there are signs of progress. For example, the annual
rush for online filing of self-assessment returns passed without
serious incident for the first time since the service was launched.
And a major data cleansing operation at HMRC is producing
quantifiable benefits.
That is why the HMRC should be ready to tell ministers that the
latest whims from Downing Street should take second place to
putting the HMRC's existing systems in order.
In December, HMRC chairman David Varney announced a new era of
openness and honesty at the Revenue. Just saying no could be the
next big step.