Will your firm pass HMRC’s new test?
It’s the first week of 2014 and the countdown has already started to one of the most important dates in the history of the Revenue, and anything that affects HMRC must, by default, be of interest to accountants, says Jennifer Adams.
For 2017 is the date that HMRC’s ‘Aspire’ contract ends and by that date all HMRC’s new IT systems must be in place – tested, working and secure.
We are already painfully aware that the government has been rethinking its approach to IT across all government departments, not only at HMRC. HMRC is required to fully digitise the many different taxation systems in the hope that this will reduce the number of paper filings and phone calls made to HMRC and thus eventually save some £50m annually in administrative costs. This article considers how far that new process has progressed, what more is to be done and focuses on one area that might require members’ attention.
New man in control: Mark Dearnley
Last year HMRC ‘poached’ Mark Dearnley as their CIO from Vodaphone, beating the current departments’ second in command to the post (see article: ‘HMRC poaches Vodafone IT boss’)
With Darnley only being in the role a few months he has already implemented changes. Before Christmas it was announced that HMRC intends to double the number of its software developers to 600 over the next three years, thus reducing its reliance on the larger IT companies such as had been the case with Capgemini and its ‘Aspire’ contract. The Aspire contract involved 300 subcontractors so what Darnley is doing is bringing the work in-house to keep control and reduce the need for more expensive outsourced expertise.
The SIAM model
Darnley’s remit is to lead the organisation through its transformation onto a system that all government departments are intending to use – the SIAM (System Integration And Management model) – for more information as to how this model works take a look on YouTube.
As ever, IT people speak a different language from the rest of mankind for the announcement of increased in-house staffing levels also advised that HMRC’s new IT department is to be the main “column”, building “capability internally around commercial, business analysis, digital capability and adopting agile methodologies” with an ‘ecosystem of SMEs’. Whatever may be the result the government believes that the use of cloud technology is key to cutting costs; the systems consolidation programmes being implemented enabling increased online use, thus providing the foundation for a more ‘cloud-like’ transformation as the 2017 date looms.
HMRC’s current IT workload
Also just before Christmas HMRC published its response to the Government Digital Strategy. The report detailed the work undertaken so far and the intended work for 2014.
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HMRC’s four ‘examplar’ projects
Action five of the report is most relevant to members, titled ‘Action 5: For transactional departments, 3 exemplar services will be selected’. The text confirms the four projects currently being undertaken within HMRC as being:
- Digital self assessment
- Business tax dashboard
- PAYE for employees
- Agent online self serve
With a view to ‘transparency’, blogs by persons actually working on the projects are being published on the GOV.uk website. The blogs make for interesting reading as they describe the day-to-day work being undertaken.
1.Digital self assessment
Last month Rachael Power wrote an article describing the content of a consultation paper that forms the basis of this particular project: HMRC consults on paperless self assessment.
As further consultation papers are published AccountingWEB will be reviewing those papers considered to be of interest to members with the intention of collating comments made into formal submissions.
2. Business Tax dashboard – colloquially named 'My Tax for Business'
This project was rolled out in April 2012, the practicalities being described in this article. More updates are to come. A comment could be made that HMRC is moving too fast in its enthusiasm to implement its ‘digital by default’ policy and with particular reference to this project, the compliance problems met by some businesses are not being considered as fully as they should. On 14 December 2013 a consultation paper was published in light of a tribunal decision going against HMRC.
The tribunal judge in the case of L.H. Bishop Electrical Co. Ltd. A F Sheldon t/a Aztec Distributors held that “the failure of the VAT Regulations 1995 to take account of a person's ability to comply on account of:
- computer illiteracy (linked to age) or
- remoteness of location – was a breach of the European Convention on Human Rights”
He also held that “the Filing by Telephone service was an unlawful concession that had not been properly published”.
3. PAYE Online
RTI was obviously the main project under this heading; additional refinements currently being worked upon. The current ‘update’ centres on employment benefits (in particular car benefits) as indicated in the first blog above. This programme is ready for testing and is intended to enable ‘customers’ to make changes to the information held by HMRC of benefits received and as such receive a new tax code in ‘real time’ rather than via the post. See ‘Update on the beta’, filmed December 2013.
4. Agent online self serve
Members might not have picked up on the relevance of this service (which is only weeks away from being implemented) although Rebecca Benneyworth wrote an update in her blog of November last. For those who have not already done so, it is recommended reading.
In summary the current agent reference is to be replaced by a ‘Unique Agent Reference’ (UAR) - (so far so good). Agents must apply and will be asked to supply further information about themselves – this is where it gets difficult.
The use of the new ‘UAR’ will enable agents to increasingly undertake the more mundane matters such as amending clients notices of coding, or reallocating payments made incorrectly. However the sting in the tail is that full access to this new service will not be granted to all currently registered agents, not until or unless that agent is deemed to be trusted by HMRC.
HMRC is apparently still contemplating what criteria must be met in order to achieve ‘trusted’ status but those under consideration are understood to include:
- Length of time the practice has been in existence
- Whether an individual (rather than the firm) within the practice is a member of a designated professional body
- The existing ‘footprint’ of the practice in terms of what HMRC already knows about the firm
- The existence of professional indemnity insurance
- The holding of a practicing certificate
- A VAT registration number
It has been reported that at a recent HMRC presentation on the Tax Agent Strategy, a further ‘criteria’ was indicated – that the ‘trustworthiness‘ of an agent may be questioned because of the behaviour and non-compliance of some clients.
The HMRC presenter commented that access to HMRC’s website would not necessarily be restricted but that HMRC would need to be reassured that every effort was being made to “improve the behaviour of those clients”. It has been suggested that this would lead to practitioners deciding not to represent clients with poor compliance histories. We await the outcome of discussions between HMRC and the professional bodies.
Next month HMRC’s Agent Learning and Support Team will be holding an event to give an update on this strategy. The event is for especially invited accountants only.
Associate editor Jennifer will be attending the event, following which she will be writing a follow up article.
Jennifer Adams is Consulting Editor of AccountingWEB and is a professional business author specialising in corporate governance and taxation. She runs her own accounting and consultancy business with offices based in Surrey and Dorset.