Delayed Eric system brings new headache for beleaguered department
The birth of Eric was never going to be easy. The taxman knew it, and especially Don MacArthur, the head of the Inland Revenue's employer programme when Eric was conceived.
About a year before the Eric project was due to go live, he said, "We are well aware that this is a big challenge for the department. It is a big technological challenge; it is a big logistical operational challenge."
The Revenue's IT supplier Capgemini was also aware of the significance of Eric as a vital cog in systems that would enable employers to file online annual tax and national insurance records for millions of employees.
Eric takes in messages from the annual returns of employers, applies quality checks and validates data, and if all is correct passes this to the Revenue's main tax and national insurance databases.
In 2003, when Capgemini and other suppliers were bidding for a renewal of the Revenue's IT contract, worth £3bn over 10 years, tax staff emphasised the importance of the online filing of returns.
Legislation was being introduced to make online filing mandatory for larger companies. The deadline for filing online or by electronic data interface for companies with more than 250 employees was 19 May 2005. The Revenue planned to introduce Eric on 6 April 2005 - in good time for it to handle returns by the May deadline.
Smaller companies had been offered a £250 tax-free incentive to send their employer returns online by the same date, even though they did not have to do so. The pressure was on to make Eric work.
When McArthur was asked more than a year ago by the magazine Payroll World whether the switch in IT supplier from EDS to Capgemini would disrupt preparations for e-filing he said, "No. This is one of the big things that we explained to Capgemini and the other bidders right from the start: that this was going to have to work and that whoever got the new contract, if there were to be a change, would have to deliver that."
But two months ago, as the tax deadline was looming, the Revenue delayed the go-live of Eric. The taxman did not believe the system was ready. It needed more testing.
HM Revenue and Customs told Computer Weekly in a statement, "We have learned lessons about proper testing of IT systems before they go live. This new approach to integrated testing in a challenging IT environment did not give us the confidence at the planned go-live date about the interoperability of Eric with our complex systems."
But should not the software have been thoroughly tested before the deadlines were set for the mandatory online filing of returns? To this, HMRC replied, "The statutory deadline for filing is long-standing and is 19 May. It was not set as part of the changes which Eric supports. Our plans were founded on Eric being delivered on time.
"However, we are not willing to compromise on fully testing the system before exposing it to the pressures of live operation and in doing so we mitigated the impacts on our customers."
Eric has been delayed for good reason: HMRC wants to avoid another IT-related debacle such as the failed introduction of tax credits. The time allowed to test systems which supported tax credits was cut short. When the tax systems went live, the links proved unstable and contributed to administrative and technical pressures which led to hundreds of millions of pounds being overpaid in tax credits and an outcry in parliament.
But the delay of Eric also has profound consequences. HMRC has put tens of millions of tax records into storage and implemented its contingency plans. These plans create extra work, adding to the workload of the Revenue while it is struggling with tax credits. With the delays caused by Eric it could be months before the knock-on effects disappear.
Capgemini says the delays will be minor and there is no reason for it to face financial penalties. The outsourcer told Computer Weekly that Eric was one of the systems it inherited when it took over the running of the Revenue's systems from EDS in July 2004.
"Eric was part of the overall estate that we inherited. Since July 2004 together with the client we have reviewed many areas of the testing strategy to ensure that the systems delivered are robust and fit for purpose.
"This review worked well in the case of Eric as it highlighted some potential difficulties. There has been a small delay while we regularise the design and testing regime. But a short delay now, with the end result being the right one is preferable, surely, to no delay and a system that doesn't work properly."