Bumpy ride ahead for the taxman

Computer Weekly's revelation that the Inland Revenue "lost" five million tax records was the latest in a catalogue of IT...

Computer Weekly's revelation that the Inland Revenue "lost" five million tax records was the latest in a catalogue of IT problems. Mike Simons reports on the measures the Revenue is taking to get back on track

Nick Montagu, chairman of the Inland Revenue, is the very model of a modern Whitehall mandarin.

Educated at Rugby and New College, Oxford, Montagu has none the less been enthusiastic in his efforts to break down the "old school tie" culture in the civil service, embracing Prime Minister Tony Blair's Modernising Government and Electronic Government agendas with equal enthusiasm.

To this end Montagu has stoutly defended the Revenue's partnership with its IT outsourcer EDS and with Andersen Consulting, which runs the Nirs2 National Insurance records computer, before the House of Commons Public Accounts Committee.

In May the Revenue chairman invited scores of journalists to the Revenue's grand Somerset House headquarters and told them of his determination to place the Inland Revenue at the head of the wired-up Government league tables.

So it must have been a considerable disappointment when Computer Weekly last week revealed that more than five million income tax records were missing, prompting a flurry of national media attention.

The news followed a string of less well-publicised IT related cock-ups at the Revenue. These included delays in the online filing of self-assessment tax returns (News, 25 May) and the re-keying of self-assessment data returned online (News, 13 July).

Butthe Revenue's IT problems do not end there. It is also having difficulty with its internal infrastructure, particularly last year's millennium bug-driven Infrastructure 2000 (i2k) project, which saw new desktop systems rolled out to the UK's 600 tax offices.

The i2k programme was the largest roll-out of Windows NT4.0 in Europe. It was completed in time for the millennium, but it was pushed through very quickly, very close to the end of the year and many tax office staff were extremely critical of the new system's quality.

The Revenue itself has acknowledged the resentment. Montagu told staff, "I am fully aware that, as more projects come on stream and we demand more and more of our IT systems in an increasingly complex world, the amount of downtime may increase, causing frustration and delays for everyone."

A briefing, titled What's Happening to IT?, spelt out the problems and what the Revenue, with EDS, was doing to put them right. However, it told staff bluntly, "We can't promise you an easy ride."

Explaining the current difficulties the briefing stated, "When we release IT systems they should be free of major problems. But that is not the same as problem free. No software producer achieves this."

The Revenue claimed that the complexity of the IT it uses means it cannot test for "every possible eventuality for every user in every office".

It added, "The Inland Revenue is not alone in experiencing IT problems. No other organisation with an IT environment as complex as ours has all their IT working perfectly all of the time. The recent difficulties with the air traffic control and stock exchange systems are two examples."

EDS has drafted in additional staff to work for the Revenue, but employees battling with problematic systems have been told the Revenue "needs to be realistic about what we can achieve".

The briefing stated, "It is not simply a question of money. It is more a question of how we match the scale and complexity of work with the skilled resources available."

However, in the July issue of ReveNews, the newspaper for Inland Revenue staff, Montagu appeared to contradict this. He said the roll-out of the i2k infrastructure to National Insurance contributions staff had been turned down because "the budget for this stage is not available. Money is tight all round this year".

Priority areas have been identified, including systems for new tax credits, the development of new electronic services, including Web-enabled contact centres and preparations for euro compliance.

Staff have been told, "This means IT changes outside these areas may not be implemented. But even this represents a massive programme of IT development by anyone's standards."

No wonder the briefing told staff, "We can't promise you an easy ride."

Problem programmes:
Local Data Capture

Local Data Capture is the system which allows tax officers to enter data onto the main systems. The Revenue told its staff, "Local Data Capture and the online function of SA [self assessment] mainframe systems have had to be completely redesigned to work effectively on the i2k IT platform. This has been a complex exercise both technically and from a business requirement point of view."

The new systems were tested, "but because of time constraints it was not possible to correct all the problems identified in the trial before national roll-out.

"We wanted to let offices start processing stockpiled returns as soon as possible. This meant the product went live with a number of known problems. In addition to those, further problems came to light when the new software was rolled out nationally."

The Revenue said many of the bugs were fixed by a software release on 10 July and it is confident that it will be able to cope with the flood of tax returns ahead of the 30 September deadline for the Revenue to carry out self assessment calculations.

Computer Support for PAYE

The Revenue has frozen development of the Computer Support for PAYE (CSP) system, which was planned to replace the 15-year-old Computerised Operation of PAYE (Cop) system, a mainframe system holding 30 million PAYE records.

The first release of CSP, the Employer Maintenance Schedule, was installed at the end of May after being delayed from April. A second release planned for this year may be delayed indefinitely, while other parts of CSP, including Coding and Taxpayer Maintenance, "will not be developed until resources become available".

The Revenue has had trouble with the interface between the Cop system and the Nirs2 National Insurance records system, which may account for many of its missing tax records.

The Revenue said it is "very clear that Cop must be replaced", but a revised timetable for development and deployment of CSP has not yet been agreed.

Compliance Quality Initiative Workbench

The Compliance Quality Initiative (CQI) Workbench was launched on 17 April to provide inspectors with an electronic "search engine" that highlighted tax returns warranting further investigation.

The Revenue admitted that it was rolled out with "a range of problems" that made it "extremely difficult to use".

The briefing explained, "Many of these problems were technical deficiencies within the system. Despite extensive testing a number of these problems did not show themselves until the Workbench was used daily by people across the country.

"Frankly we didn't understand and properly test the interaction between the Workbench and other systems."

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