HM Revenue and Customs is to invest £340m in its online
service infrastructure over the next nine years as it bids to meet
the aim of universal electronic delivery of tax returns from
businesses by 2012.
The investment includes the £205m already committed to improving
HMRC’s online infrastructure, plus an additional £135m announced in
the Budget.
Moving towards universal electronic filing is the key
recommendation made in Lord Carter’s review of HMRC’s online
services, which was published alongside the Budget. It is hoped the
move will save businesses and taxpayers £175m a year and reduce
administration costs by £84m a year.
Lord Carter recommended that, in stages leading up to 2012,
businesses should be required to begin filing VAT returns, Pay As
You Earn in-year forms and company tax returns online from April
2008, while computer-generated paper “substitute” returns for
income tax self-assessment should be phased out from 2007-8.
But he warned: “Achieving this … will require online services to
be properly designed around the needs of taxpayers and their
agents, and sufficiently reliable and robust to provide good
customer experience at peak times. Crucially, HMRC needs to make
substantial investment and to rigorously test any change prior to
implementation.”
Paymaster general Dawn Primarolo welcomed Lord Carter's report
and recommendations. She said, “The measures announced respond to
the needs of business for a package of robust, high-capacity online
filing services.
"An expansion in electronic delivery of tax returns will benefit
businesses and taxpayers with savings of £175m a year by
streamlining the filing process."
The work will be managed by HMRC through its existing Aspire IT
contract.
HMRC has come under fire after the tax-credits system fiasco
that saw two million claimants overpaid by a total of £1.9bn, with
software errors responsible for 540,000 wrong payments. Last month
the Commons Public Accounts Committee found the troubled department
was making errors in calculating at least a quarter of taxpayers’
PAYE codes.
But the HMRC website held up well as the deadline for
self-assessment tax returns arrived at the end of January, with no
reported problems. This marked an improvement on 2005, when
taxpayers’ deadlines had to be extended by a fortnight because of
failures in issuing receipts.