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An audible gasp greeted Lord Carter's announcement, at the Tax Faculty's Wyman Symposium on 10 July, that he had revised his recommendation to ministers on self-assessment tax return filing dates. As everyone now knows, his revised recommendation is that the filing date for electronic returns should remain as 31 January and that the date for paper returns should be 31 October. By the time that this goes to print I hope that ministers will have accepted the new recommendation.
For the past three months, a huge amount of work has gone into reversing the original proposal. Taxation magazine's 'No to November' campaign was supported by nearly 6,000 readers and the early day motion attracted over 100 MPs' signatures. These were very high profile initiatives and many accountants in practice — especially sole practitioners in smaller firms — rightly asked why their professional bodies were not being more openly combative. I had many e-mails urging a declaration of war. Behind the scenes, away from the glare of publicity, a quiet but ultimately effective battle was being fought. There are times for head on clashes and there are others when, if the aim is to be achieved, talking works best. This was a case for the latter.
Many a winding turn
Taking it back one stage, a report on HMRC's e-filing services was published on 22 March 2006 with the Budget. It was undertaken under the independent supervision of Lord Carter of Coles.
Within a few days of the publication of Lord Carter's report, a meeting took place between representatives of the Association of Accounting Technicians, the Association of Chartered Certified Accountants, the Association of Taxation Technicians, the Chartered Institute of Taxation, the Institute of Chartered Accountants in England & Wales, the Institute of Chartered Accountants in Ireland and the Institute of Chartered Accountants of Scotland. Shortly afterwards, the Society of Trust and Estate Practitioners joined us. We asked for an urgent meeting with HMRC and HM Treasury and that meeting took place in early April.
Having put our case, we were asked to provide some statistical evidence. We organised a detailed web-based survey — and that was not a simple task — which received a staggering 1,162 responses in the first 24 hours. The survey was closed after a week, such an enormous amount of data having been received that by then we had enough, and the results were analysed and set out in a formal response.
Then Lord Carter, who had been watching from the sidelines, said on 9 June that he would like to see the evidence we had produced. He also asked for a meeting to discuss the evidence and our arguments. On 10 July, at the Tax Faculty's annual Wyman Symposium, he announced that he had found the arguments persuasive and had therefore changed his recommendation. There were many other meetings and conversations along the way to which I do not wish to refer, but which were critical to the ultimate outcome.
Much has been said about whether this could all have been avoided by proper consultation in the first place and I agree, but I will just add one thing: in my books there are depressingly few people these days who would have had the good grace to stand up in front of the audience Lord Carter faced at the Wyman Symposium and say:
'One of things that you learn in life is that when you don't get things right, you have to listen. Four weeks ago I said that if a convincing argument could be made I would look at this again. People have come forward and made some convincing points, therefore I have written to the Paymaster General saying I wish to change my recommendations.'
Let's give him some credit for that.
He ain't heavy
In my speech — which followed Lord Carter's — at the Wyman Symposium I tried to give an idea of the way the road ahead looked from the profession's perspective. I am well known for my pro-e views, but I began by quoting from the song 'He ain't heavy, he's my brother' (written by Sidney Russell and Robert Scott) which some wag had installed a year or so ago as the 'hold' music on the HMRC e-services helpline. The opening verse talks of a long and winding road, with no-one being sure where it leads. I said that this seemed appropriate as the road to e-services had been a long and winding one with some notable successes, for example the electronic lodgment service, but too many potholes. The characteristics all too frequently seemed to be:
- services launched before they were sufficiently tested;
- a lack of robustness;
- a lack of adequate capacity;
- a patchy track record on consultation ranging from the admirable to the non existent; and
- an obsession with launching on arbitrary target dates irrespective of whether a service was ready.
To deliver the Carter plan effectively, all this has to change and the watchwords must be capacity and robustness. Further, services must be designed with users' needs, not just HMRC's needs, in mind.
The IT landscape is changing rapidly and has changed significantly since the launch of ELS back in 1997. Use of the Internet is now general and most of us book holidays or get our news updates using it (though not of course on employer-provided computers). There are fewer concerns over security and IT is now far less expensive. While the time appears to be right for a major step on the road to 'e-compliance', take-up rates have remained disappointing which was why the Paymaster General in July 2005 asked Lord Carter to see what could be done to drive take up.
Identifying the burdens
With the filing date issue now behind us, let's look at the positive elements of the report, something I felt unable to say very much about in my article 'No winners here' (Taxation, 13 April, page 27) because the deadlines issue was so important.
For years we have been asking for the ability to include accounts and computations with Internet returns to deal with the critical issue of disclosure and discovery. HMRC have always avoided this by saying that they did not want this extra information electronically. The report, though, recommends that this facility is added and HMRC now plan to do so this autumn. The promise of five megabytes per return should be more than enough for most taxpayers.
We asked for an enquiry window linked to the actual filing date, rather than the statutory date, to help spread the workload and to assure clients that early filing did not increase the risk of enquiry. The report recommended this too and this appears to mean that if you file your return in July 2008, the enquiry window will close in July 2009 rather than January 2010.
Perhaps more importantly we asked for better, more open and more frequent consultation and for services only to be launched when they were fully tested and fit for purpose. Lord Carter made this a major theme of his report and it is one I will come back to because it is so important.
If I'm laden at all …
But there is another barrier: the perceived business case. For those of us who have been e-filing since 1997 the business case is clear. We no longer photocopy the signed return for our file — the signed copy is our file copy — and when you prepare a couple of thousand returns a year that is a lot of paper, ink and postage and, indeed, secretarial time.
We no longer find ourselves faced with errors from mis-keying of entries by HMRC's staff — what we key is what HMRC's system captures. The idea of someone keying from a document that someone has already keyed makes no sense to me at all. Electronic returns do not get lost in the post, and to date we have lost none in cyberspace. With ELS we knew within a day and with filing by Internet (FBI) we know within a few seconds that the return has been captured; and if it has not been, why not.
We no longer have to wait weeks or months to see written confirmation that a return has been received or processed and we do not have to worry about getting paper returns date-stamped. These are all compelling reasons.
The Carter Principle
But if they are so compelling, why have so few of us felt compelled?
The answer is because of the barriers I listed earlier and because of the track record of lack of capacity and robustness. With the removal of the disclosure and discovery barrier and of the enquiry window barrier, we are left with capacity, robustness and fitness for purpose. That is where the 'Carter Principle' comes in. I have given it this name because if it has one it is more likely to be remembered. Furthermore, if we remember it and keep drawing HMRC's attention to it, the future can be very different from the past. If we just let it languish unremembered in a report on a dusty shelf, we will have thrown away something extremely valuable.
The Carter Principle is set out at paragraph 5.5 of the report and says:
'… as a principle HMRC should only require use of an online service where the particular service meets the needs of the main users and it has been tested to show that it can meet demand and provide a good customer experience at peak times.'
The report goes on to say that '… if any tests are not successful, the service should be deferred'.
Will HMRC embrace the Carter Principle? Steve Lamey, HMRC's chief information officer and the third speaker at the Wyman Symposium made it clear that it was as important to HMRC as it was to taxpayers and the profession. We can perhaps also draw an encouraging conclusion from the fact that when the profession and software providers warned that the new construction industry scheme (CIS) system would not be ready this April, HMRC deferred its introduction for a year.
Listening mode
The consultation process must be more effective than it has been to date with so much at stake.
I hope that Lord Carter will be asked to maintain at least a watching brief as we travel the road he has set out. The creation last year of the Working Together 'e-group' was also very timely. There will be many operational issues created by the proposals, and practitioners will rightly look to the e-group to identify, raise and help to resolve them with HMRC. There are, however, other consultation groups, all of which bring considerable expertise to the table and some thought is needed very soon on how these different groups can work most effectively. There is a danger of overlap and of duplicated effort — or even worse, mixed messages — if we do not have a clear structure in place that everyone understands.
I still believe however that there is a need for a further forum, the friendly watchdog that I advocated in my article 'Snoop dog, e-dog” (Taxation, 3 November 2005, page 111). I will not rehearse all of the points again, but what I had — and still have — in mind is a small independent body similar to the Electronic Tax Administration Advisory Committee (ETAAC) in the United States. ETAAC only has 14 or so members but they represent all stakeholders: the IRS, agents, software developers and taxpayers, and it provides a supportive sounding board at the strategic level. I think that it would be difficult for any of the consultation groups I have mentioned to take on this role without diluting their role in dealing with detail and I see its role as different from that of the National Audit Office and the Public Accounts Committee.
Conclusion
In my view, the realisation of a plan as ambitious as the one set out by Lord Carter needs such a monitoring body. The benefits would be better, more effective consultation, effective monitoring of strategy, a better chance of services being fully functional when launched and as a consequence a better initial experience, better publicity and significantly increased take up. It could be the glue that binds the monitoring and consultation process, especially the different consultation groups, together.
I ended my speech at the Wyman Symposium by stressing the need for HMRC and the profession to work together to deliver better e-services and the last words of the song seemed appropriate: 'While we're on the way to there, why not share?'
Paul Aplin is deputy chairman of the ICAEW Tax Faculty and a tax partner with A C Mole & Sons. The views expressed are his own and do not necessarily reflect those of his firm or of the Faculty. He can be contacted on 01823 624450 or e-mail: paulaplin@acmole.co.uk.
