Revenue must learn to say no


Revenue must learn to say no

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.

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This was first published in February 2006


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