back to article UK tax fraud IT project 'missed virtually every delivery date'

IT projects that formed part of Revenue and Customs' (HMRC) compliance and enforcement programme missed key delivery milestones and failed to bring the expected recovery of tax, according to a report by the National Audit Office. The compliance and enforcement programme was implemented between 2006 and 2011 with the aim of …


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  1. Anonymous Coward
    Anonymous Coward

    Oh well..

    Least they're being honest when they say they're defrauding the tax payers.

  2. irish donkey

    Let me help

    Vodafone, Burton, Barclay's and pretty much any other company that pay's their wages and bonus's through off shore shell companies would be a good place to start looking for a few billion.

    There you go... a few billion saved and I gave you that for free.

    Another idea... a few less expensive lunches is sure to make the tax receipts go up.

  3. Anonymous Coward
    Anonymous Coward


    they could look at where the money they pay to rent back the buildings they used to own is going, seem to recall it is a little island in the Carribean.

    Then there are those wonderful people running public bodies who are working through limited companies and somehow paying almost no tax, something IR35 is supposed to defeat.

    Isn't it funny how everyone knows about these large-scale avoidance cases but nothing seems to be done, almost like HMRC is 'not fit for purpose' but surely that can't be the case.

    Anon obviously as they seem very good at stomping on little people.

    1. Sir Cosmo Bonsor

      Re: Also....

      > "working through limited companies and somehow paying almost no tax"

      Can you explain how this works? It's a claim that gets bandied about (perhaps it used to be true) but nobody has yet been able to demonstrate to me how forming a limited company saves one tax. A little NI, yes, but not tax, once you factor in Corporation Tax and Dividend Tax.

      Not trolling, I just want to know how people think this works.

      1. sugerbear

        Re: Also....

        [quote]Can you explain how this works? It's a claim that gets bandied about (perhaps it used to be true) but nobody has yet been able to demonstrate to me how forming a limited company saves one tax. A little NI, yes, but not tax, once you factor in Corporation Tax and Dividend Tax.[/quote]

        Its simple but to make it worth it you need to be in the 40 or 50% tax band.

        You pay yourself a salary up to the 20% tax threshold each year (approx 44k). Anything over this gets paid as a dividend each year which is taxed a corp tax rate of 20% where as if you have to pay 40% or 50% through PAYE... You also save on NI.

        There are also other benefits like being able to employ (for example) your wife as company secretary and use her tax allowance. Items bought for the business are also VAT free (computers, phones, commercial vehicles etc etc).

        1. irish donkey

          Of course you could use the U2 method

          money is paid to their shell company based in the Holland which incurs only a 10% tax dividend (if that)

          Bono et al. Of course don't get paid themselves they just do it for the love. So they have zero tax liability.

          of course I could be completely wrong and St Bono pays billions in tax while helping the starving millions. But interestingly U2 MegaCorp moved their Business to Holland when Ireland hit the rocks and had to ask/beg/plead with U2 MegaCorp to help us out.

          Bitter? Very

        2. Chris Miller

          Re: Also....

          Dividends are free of basic rate tax (because they are paid out of profits that have been subject to corporation tax ~= basic rate tax) but will attract higher rate tax, if you're earning enough. You can spread dividends, so if you earn tons one year and nothing the next you may avoid some higher rate tax. If you have a partner who isn't paying higher rate tax, you could pay them some dividends too. But that's about it (legitimately).

          You can save some NI, but then you lose some of the benefits for which NI is intended to pay (I know, it isn't hypothecated).

        3. Sir Cosmo Bonsor

          Re: Also....

          > "Anything over this gets paid as a dividend each year which is taxed a corp tax rate of 20% where as if you have to pay 40% or 50% through PAYE"

          Except this isn't true. I wish it were. Corporation tax takes 20%, but dividend tax then takes (effectively) 25%. Do the maths: take 20% off an amount and then 25% off the rest, and you've taken 40%. That isn't a coincidence.

          You can't use your 20% income tax band *and* your 0% dividend tax band - the calculation is based on your combined personal income.

        4. FredScummer

          Well if this "tax dodge" was so brilliant I'm surprised that more people aren't doing it.

          No-one is exempt from paying income tax, and that includes contractors. Arranging your remuneration to include payment by dividends CAN save national insurance payment, because dividends are not subject to national insurance. But income tax is still paid on the divvies. Furthermore, so is corporation tax on company income.

          On the downside of being a contractor is that whilst HMRC are keen to infer that the contractor is an employee and tax him accordingly, unlike the employee the contractor gets no sickness, holiday. training or long term employment benefits. The contractor can turn up for work one day and be dismissed without there ever being a hint of an industrial tribunal or redundancy payment. Try that with an employee and the employer would face criminal action.

          Furthermore, contracts are undertaken for a specific period of time. At the end there is no right to be redeployed elsewhere - you are on your bike looking for the next gig, and that can mean several weeks if not months of having no income. So the savvy contractor is putting something away during the good times so as to pay for the bad times.

          For sure, there are contractors who take the mickey. But by the same token there are employees who don't exactly conform to their contract of employment.

          Many contractors, myself included, would be happy to sign away those employment rights in return for fair treatment under IR35 where everyone is treated equally.

          So before you start moaning about how contractors are working unfairly, ask yourself why you aren't taking advantage of the obvious tax advantages that becoming a contractor would bring. The answer is probably that you like your pay to turn up in your bank account every month and take paid holidays with your family without having any of the hardships that being a contractor could bring.

      2. Shady

        Re: Also....

        Me too. As a contractor I pay virtually no NI. I do however pay tax three times over - Corporation Tax, PAYE on a directors salary and Tax on my Dividend payments over a certain limit. Paying reduced NI and being able to claim expenses are the big savings, tax, not so much. The "quality tabloids" and the other stirrers claiming that these people are only paying 20% tax are either just plain wrong or are wilfully misinforming the public to stir up grief. Yes, these people *are* only paying 20% in tax - assuming that they do not then withdraw that money in the form of dividends and are instead squirelling it away for a rainy day. They will get (income) taxed when it's withdrawn, unless they pay themselves small dividends of say £30,000 a year or less (finger in the air - I do not claim to be an accountant) and have no further sources of income. It's all swings and roundabouts. Not paying NI isn't such a dodge either, as they will not receive Statuary Sick Pay (SSP) in the event of illness, and under the old / current rules may receive a reduced state pension. And that is the limit of my understanding. And I am probably completely wrong

      3. Anonymous Coward
        Anonymous Coward

        Re: Also....

        a) buy a load of business assets (computers, flat screen tvs, laptops, latest mobile phones) and offset it against profits; depreciate it over three years; sell it on to a director (aka yourself) for a token £1 at the end of that time

        b) trickle out dividends to the owners (aka yourself) every year, so rather than paying 40% tax on them because you earned them in a bumper year, you can pay basic rate for the next 5 years while enjoying some paid time off

        c) pay yourself 40p per mile tax free to travel; make sure you do a load of travelling

        d) every flight you take and meal out is a 'business expense'

        e) employ family members to provide 'consultancy' services which can be deducted against tax

        There are just the obvious ones. You can absolutely bet there are hundreds of loopholes and deductions and sneaky allowances that the accountants and tax pros all know about...

      4. Anonymous Coward
        Anonymous Coward

        Re: Also....

        Think you need to get a better accountant if you can't make a Ltd. work for you..

  4. Citizen Kaned

    anyone else...

    not see how systems cost hundreds of millions to create. i just dont see it. someone is making big £££ off us somewhere

  5. Crisp

    If I had a Pound for every time the government wasted money like this

    I'd probably still get taxed on it.

  6. Anonymous Coward
    Anonymous Coward

    They never think about the people

    We're going through a similar thing right now. Millions spent on a whizzy new system, no-one has thought about the people and business processes needed to make the thing work.

    So it doesn't, at all/

  7. Magnus_Pym

    Three problems...

    ... The 'customer' keeps changing every few months. The 'customers ideology is liable to a complete change every few years. It's a problem of career politicians and first-past-the-post government.

    Firstly career politicians have no interest in the department they temporarily head, only in how it can help raise their profile. So they all like to make a big noise as they move in and then move on quickly. Hence frequent changes to large (news worthy) projects. Secondly first-past-the-post leads to wild swings in government and cabinets that control parliament entirely. This leads to huge and costly 'reviews' of all projects that often cancel or re-define every part of a department and the work being done for that department. This leads to government projects being a very specialized part of the industry. One in which taking additional funding to cover for political stupidity and signing hard and fast contracts against vague and wooly specification is the norm.

    So what's the point? The only point of a large scale government IT contract is the headline it produces when initiated and the effect that has on the politicians career. After all the cabinet minister responsible will be retired on a tax free, index linked pension and have several lucrative directorships in the sort of private industries that take on government contracts by the time the project inevitably fails.

  8. Anonymous Coward
    Anonymous Coward

    Shock horror amazement!

    Public sector IT project screwed up!

    In other news :- Pope catholic, bears shit in the woods, Putin wins Russian election.

  9. AlanGriffiths

    Depressingly familiar

    Over the three decades I've been developing software I've repeatedly worked on projects where the objectives were unclear, the targets changed and there was tension between funding, functionality and quality.

    I've also repeatedly heard the sponsors, clients, or customers blamed for these problems. It is the developers that are at fault, change is a part of most problems that software solves, and the "soft" is in there for a reason - to support change. Change is normal, lack of clarity is normal, and in these cases to sell systems based on "you give me fixed, clear requirements and I'll give you a fixed price" is dishonest.

    There are better ways.

    1. Anonymous Coward
      Anonymous Coward

      Re: Depressingly familiar

      I like your attitude.

      Don't expect the situation to change though, even if people do take you up on it.

    2. FatGerman

      Re: Depressingly familiar

      Government IT projects are subject to such scrutiny that they cannot even be started until the budget is fixed, the costs are known, the timescales are carved into a mountain and the civil servant running the thing has been bought at least 3 dinners. So "fixed clear requirements" are essential for a public IT project. Ergo, they're all doomed from the start.

      If I, as a software contractor, ask a customer for some "fixed, clear, requirements' and that customer gives me some I take them in good faith. If the customer comes back to me in 2 months time and says, 'er, actually we screwed up and all the requirements have changed' then I will tell them that in that case my fee and timescales have also changed.

      Given that we the public demand transparency and accountability from our public servants then the scrutiny isn't going to go away. So what is needed is greater competence at the planning and requirements gathering stage, and that is the customer's problem.

  10. mark 63 Silver badge

    Dont worry, I expect by now the govt have learned to put penalty clauses in and we'll soon be recovering the 5bn fro the respective contractors.

  11. Cam 2

    Which private sector companies are involved?

    I always wonder how the private sector companies involved get to have such a low profile when it goes pear-shaped... or is this all public sector?

    1. Kevin Johnston

      Re: Which private sector companies are involved?

      Reading Private Eye is always a good start here. They have many, many pages detailing how the likes of Capita/EDS/CSC et al have gone into these projects with wide bright eyes only to start hemming and hawing a few months in when those nice clean details turn out to be marketing speak for 'not a clue - can it make toast?'

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