back to article Taxing times: UK missed out on £1.75B because of digitization delays

Delays to a central plank of the UK tax collector's efforts to provide an end-to-end digital service "mean the Exchequer will likely miss out on additional tax revenue of £1.75 billion," according to a spending watchdog. At a time when government debt is soaring, there have been repeated delays in introducing Making Tax …

  1. codejunky Silver badge

    hmm

    "In October 2023, the government borrowed £14.9 billion, the second-highest borrowing figure for that month since records began in 1993. The national debt remains historically high, narrowly below GDP at £2.6 trillion."

    The trick being to spend less than you take in

    1. emswift

      Re: hmm

      only if you assume the economy won’t grow and your currency won’t inflate

      1. codejunky Silver badge

        Re: hmm

        @emswift

        "only if you assume the economy won’t grow and your currency won’t inflate"

        Our inflation issue is through too much money being printed and borrowed and spent by government. The supply of money being well beyond our growth which is why there is such inflation. The over spending being why we have such a historically high national debt and high borrowing figures.

        So based on what I quoted I am right, The trick being to spend less than you take in

  2. AMBxx Silver badge
    FAIL

    Digital tax?

    Best approach if HMRC want to save money would be to revert to paper system. The more they digitise, the worse they get.

    1. JimboSmith Silver badge

      Re: Digital tax?

      It’s not known as Making Tax Difficult for nothing you know!

    2. Dacarlo

      Re: Digital tax?

      As evidenced from the Covid enquiry, politicians and in particular the current clutch, do not do joined up thinking when it comes to strategic planning and in some instances are just too dense to get it.

      Why would we think planning around digital technologies be any better?

      1. Willy Ekerslike

        Re: Digital tax?

        There's the saying: If you can, do; if you can't, teach! That's harsh on the majority of teachers, who are dedicated to their job, but allows a follow-on epithet: If you can't even teach, become a politician.

        I know politicians (and, especially government ministers) can't be expected to be experts in everything they need to address, but they need to have a basic understanding about what their advisors (who should be expert in what they're advising) are telling them. Unfortunately, those who rise to positions of authority in government (and, dare I say, the Civil Service) get to those positions through skills that bear no relation to what is needed once there. In my view, the greater the ability to rise above the competition, often the less the ability to be of use once there.

        I see politics as little difference from commerce/business, where I've regularly seen the Peter Principle in effect. If somebody is good at their job, rather than get recognised (and rewarded) doing that, they get promoted; if they're good at that job, they get promoted again; and so on until they are in a job in which they're not good - and there they stay (until retirement or gardening leave). That path isn't inevitable as there are some good, competent people in senior roles, but they are rarely in a majority.

  3. elsergiovolador Silver badge

    IR35

    That IR35 is working very well for the government.

    Expect more delays and disasters due to lack of competent people willing to work for pittance and then paying majority of income for services that don't work.

    1. Anonymous Coward
      Anonymous Coward

      Re: IR35

      Boo Hoo I'm a cunting contractor on treble what you wage slaves get, but I have to pay tax on it! :'( How unfair

  4. Pascal Monett Silver badge
    Trollface

    "digitization delays"

    The fun thing about reading about UK Government shooting itself in the foot is how hilarious it is to consider that all their problems are entirely due to their own stupidity.

    The stupidity of God only knows how many highly-paid people who consider themselves extremely important.

    UK Government is shadenfreud writ large.

    1. Anonymous Coward
      Anonymous Coward

      > The stupidity of

      What would be a constructive way to fix that?

      1. Dacarlo

        Re: > The stupidity of

        Perhaps have the *actual* best and brightest planning instead of populist types voted in on the strength of the emotion they can evoke. Or at the very least people bright enough to know they don't have the answers and will convene a broad base strategy team to address the interconnected fundamentals and dependencies.

        Or ya know, nip down the pub and scribble it all on the back of a fag packet like we're currently doing.

        1. Anonymous Coward
          Anonymous Coward

          Re: > The stupidity of

          Having intelligent politicians is of itself not enough - they need to have integrity, energy, and a willingness to put the national interest first, ahead of both their own and their party's interests.

          Even then, that addresses some aspects of the chaos of government, but there's then a further requirement. Poor decision taking by ministers is a key and repeated failure of government, but a contributor to that (in addition to the absence of talent in parliament) is that ministers have too many decisions to make and insufficient time to properly understand the consequences, risks and tradeoffs. A lot could of non-policy decisions should be farmed out to the civil service (and ministers should have zero involvement with contract awards and procurement choices). That might sound simple, but it would be a huge and structural change in the way democracy works in this country.

          What is then needed is accountability applied to the senior civil service and suppliers - so proper project reporting, timely reporting so that when things start going wrong then it isn't left to become exponentially worse, individuals names being associated with decisions, zero tolerance for excuses, incentives tied to useful outcomes, better pay so that the civil service can recruit the skills it needs, and retain staff in roles. There also needs to be transparency when things go wrong where the policy is crap - again, another major departure from the way government works, the civil service need to be able to call out poor decisions. Take a look at HS2 - the problem there is that the policy decision was wrong, taken for party political reasons, and to force it through the "business case" was built on made up numbers that everybody knew were ridiculous fiction even at the time. No matter what the administrative branch of government might have done, HS2 was always going to overspend, the whole scheme was unaffordable, and it was always going to offer very limited benefits.

          How likely is any of that? It isn't going to happen. The Tories could have selected MPs for intelligence, integrity, energy, and national interest, but they have chosen at every opportunity to double down on their old formula of choosing leaders from the third rate pillocks of Eton, they'll take any dirty money they can find, and milk every office of state for their mates interests. They'll blame the civil service or anything else rather than be accountable for their own (or their party's) actions. And to judge by the Labour party's performance over the past twenty five years, they're different but no better.

    2. Dacarlo

      Re: "digitization delays"

      Alas, when they shoot themselves in the foot they shoot the rest of us in the foot too.

  5. Roland6 Silver badge

    "...Making Tax Digital for VAT and self-assessment alone to cost 400 percent more in real terms..."

    Does that include or exclude the replacement of CHIEF?

    1. Anonymous Coward
      Anonymous Coward

      Re: "...Making Tax Digital for VAT and self-assessment...."

      CDS (replacement for CHIEF) is completely separate. Mind you, it had the same sort of problems, with massive failings to collect import duties - but I believe Fujitsu were involved, so quel surpris?

  6. abend0c4 Silver badge

    Hold senior leaders accountable

    Presumably only in the civil service. Imagine if the concept were extended to ministers.

    1. Paul Crawford Silver badge

      Re: Hold senior leaders accountable

      Would be an added tourist attraction for the Tower of London - back to the old days...

    2. Anonymous Coward
      Anonymous Coward

      Re: Hold senior leaders accountable

      And name the results of their work (roads, buildings etc) after them. So that future generations would know who's fault was that. Was it what they did in the Roman Empire?

  7. Anonymous Coward
    Anonymous Coward

    Tax law complexity

    Extreme complexity of tax laws might be the reason. Quite often even the tax authority people are unable to help with filling the forms. Usually it is the tax lawyers who finally decide what is what. In the context of the article, the project specification probably makes you Munk's "Scream".

    Software developers know quite well, what a bad/complex vs good/simple programming language could do. Good one is like magic. But it takes a lot to get it right.

    1. J P

      Re: Tax law complexity

      Underlying legislative complexity is a huge part of the problem. HMRC maintains a list of "paper filing exceptions" for the interactions which its software can't cope with (interestingly, it's often the independent software suppliers who alert them to issues, and typically have a fix in their own product; they can be far more responsive than HMRC's system.)

      HMRC/government were begged to simplify the tax code before trying to digitalise the process for implementing it, but didn't. The aspiration of integrated tax software for business will remain just that while the basis periods, filing deadlines and calculation methods for VAT & profits taxes (CIT or PIT) are all different. Using agile development on a "one size fits all" programme probably wasn't the best choice; there are features which were optimised for VAT, are now hard coded into the primary legislation, and which fatally compromise elements of the profits taxes exercise to the extent that most of the benefits on which MTD as a whole was sold to Ministers will no longer materialise. But all the costs (and more) will most definitely materialise.

      1. Lurko

        Re: Tax law complexity

        The counterproductive complexity of the UK tax code has been recognised for a good few years now. Back in 2012 the Office of Tax Simplification* worked out that there 17,795 pages within the relevant sections of Tolley's Yellow and Orange books. In itself that's quite telling, that treasury & HMRC are so incompetent that they don't have their own consolidated view of statutory tax rules and guidance on interpretation. Whilst I can't do a like for like comparison, news coverage suggests Tolley's added about 10,000 pages between the 2011 version OTS used for their analysis and 2021. Whilst there's a good few press articles about the UK having the most complex rules in the world, those claims are nonsense - the complexity of our tax is about the same as the US, France or Germany (not a good thing, but shows we're not an outlier).

        By comparison, the Hong Kong tax code of 350 pages has long been celebrated as a model of clarity. Singapore is another location known for (by international standards) a clean tax code. With all the UK government's plaintiff and utterly pathetic whining about the importance of trade, growth, "smarter regulation", and being business friendly, you'd have thought it an easy win to take the HK or Singapore rules, make minimal changes and apply that. Unfortunately, our government really don't care about business, it's all pretence.

        * Yes, there was such a thing. Obviously they didn't have much success because politicians kept on making tax more complicated, so they didn't have a chance, and were disbanded early this year.

        1. ArrZarr Silver badge
          Unhappy

          Re: Tax law complexity

          As much as it pains me to in any way defend Westminster, there are a couple of things I'd like to point out.

          First, HK/Singapore's tax codes have fewer considerations to take into account. I suspect that even if there are non-urban sectors of their economy (farmers, miners, etc), those sectors make up a considerably smaller voting block and lack the weight that those blocks do in the UK, meaning that they won't get the same level of attention in their tax books. Statista shows that Services are 93% of HK's GDP with Industry being around 6% and agriculture being 0.1%.

          Second, HK and Singapore had a hard break with their respective overlords (Singapore had 2, with independence from Britain and Malaysia), which gave them an opportunity to reset their tax codes to a sane degree and they have had considerably less time to expand upon those rules.

          That being said, it would not surprise me in the slightest that rather than spending time actually trying to do anything useful for the country, Westminster has spent the last 13+ years working out the best way to make sure their friends keep as much money as they possibly can while the people who work for a living pay for their cushy existences.

          1. J P
            Boffin

            Re: Tax law complexity

            A few years back a Chinese colleague forwarded me the entirety of their corporate tax code - it was about 4 sides of A4. The corresponding downside to that was the China Tax Daily: the newsletter which told you how you were supposed to interpret the high level principles set out in the legislation. Since interpretation was up to the local offices (notwithstanding the central guidance) there were multinationals who rolled out the same corpoate structure across all the provinces and then got conflicting and on occasions completely contradictary local interpretations on how they should be taxed.

            It's a well recognised tension; simplicity vs certainty - you can write a rule for every circumstance so as to maximise certainty, but it gets very complicated, or you go for simple "rules", but then it's harder for the more unusual cases to know where they fit in. Given the current Forum, I'll let others comment on which is more suited to digitalisation (I'm a tax geek rather than a techie).

            Although all the (former and) Commonwealth countries have had the chance to rewrite the words in their tax law, they often haven't particularly - but you're absolutely right that the context of the local economy is key. A few years back I was asked to provide some commentary on the local Budget for an Anglophone African country whose code was based on a 1930's Commonwealth Taxes Act; broadly indistinguisable from the then in force UK ICTA 1988. The law words were similar enough for me to be totally comfortable, but the economic context was more challenging - a two penny change in basic rate of income tax, banner headline stuff in the UK, was [in a country with 80% informal economy] pretty much irrelevant. On the other hand, a penny on parafin tax [which we'd laugh off as irrelevant in old Blighty now] was actually pretty significant in a country where a siginifcant chunk of the population (and related economic activity) were reliant on generators & Tilley lamps.

  8. shawn.grinter

    New definition of "Digital"

    For VAT I used to be able to type values from my Accounting Software** into boxes on HMRC site, confirm and submit. HMRC confirmed successful submission there and then Thus all in my view "digital"

    *NOW* I have to take the values from my Accounting Software, type it into an *EXCEL* spreadsheet (macOS Numbers not supported for my gateway), save it, send it to my Accountants portal, upload it, confirm OK, hit the "send" button, confirm with the gateway it was OK then asynchronously wait for HMRC to say OK.

    Oh, and HMRC Basic Tools no longer works on current version of macOS

    **Doesn't support direct submission.

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