The taxing issue of online filing
28 Mar 08
Filing tax returns electronically will become the norm over the next few years, but some accountants are still to be convinced
by Guy Clapperton
The problem with assessing the impact of Lord Carter’s report into online filing of self-assessment tax returns is that the implications, and particularly the implementation, of his recommendations has yet to settle. Accountants have sent letters out to their clients alerting them to the forthcoming 31 January deadline being the last one before everyone moves to November filing – only to find that a little backtracking by the Government means this isn’t actually going to happen yet after all. Lord Carter thinks it’ll have to come up again at a later stage.
As long as clients have their paperwork in order and have set aside enough for tax (readers will be excused a dry, cynical laugh at this point), the date is pretty much immaterial. What’s going to matter is the sub-text, which essentially says “you WILL file online, you will file online SOON and EVERYONE will file online by 2012”.
Tax practitioners aren’t enamoured. Alan Tucker is a tax partner at EQ Accountants and wishes there would be more of a carrot approach than simply a stick. “Things are obviously moving towards filing online, and our systems will be able to cope, but we’re moving from a low base because we haven’t filed online at all yet.” The reason was basically a lack of confidence in the system. “There seemed to be no great benefits to us as a practice in doing it,” he adds. “We still need clients to sign off two bits of paper, and if they’re signing it and sending it back, you’ve got paper handling anyway, so you might just as well do it on paper.”
A system that invited, rather than tolerated, online submission would be useful, then – Tucker says going online to view your client’s payment record is a nightmare at the moment. This sort of expression of frustration needs tempering, though, with the knowledge that work is going on to make it simpler. Frank Moyer, managing director of EzGov, which provides the software that makes online filing work, confirms the numbers are growing as a result. “Last year, the figures reached two million people filing online for self-assessment,” he says. “The take-up when it started in 1999 was 30,000 users. We typically see a 90 per cent return rate for the Inland Revenue from the application year on year. In other words 90 per cent of people come back.”
He points to ease of use as a significant factor in people’s decision to return year on year. “People see how easy it is one year and tell their friends,” he says. It’ll continue to improve: “We are able to see the trend throughout the year and gauge that against previous years. We are expecting modest growth over the next year and due to some of the Carter implementation we’re doing, that will grow even further.”
Well, to go into Mandy Rice-Davies mode for just a moment, he would say that, wouldn’t he? Tucker still has reservations about how the changes are being made. “We’re just being told that we’ll have to do it electronically or our deadlines will be shorter. Our systems will cope, but why?” He sees few benefits other than the Government saving money. “There will be some reduction in handling paper, but not much if we still have to get people to sign paper. The other benefit is in the faster response than you’d get on paper; the response at the moment is embarrassing.” He’s tested the new response time and the system does appear faster than before. He would welcome more consultation on how it’s being done: “I would rather they were encouraging us using other means… what I find disappointing is that there seems to be very limited liaison between the Revenue and the practitioners. There is a lady in Dundee but she’s over-stretched. I want to do it, but I want the system to be good first.”
The other piece of the jigsaw will be the client’s willingness and confidence. Web testers SciVisium have been investigating reactions to the idea and the conclusions won’t make comfortable reading for HMRC. “For most people, tax returns are enough of a pain,” says chief executive Deri Jones. “But for those who have gone to the trouble of arranging online passwords for their tax returns, and are prepared to do the process online, knowing that this also makes the Revenue’s job a whole lot easier than sending paper around, means that poor performance on the web portal is unacceptable and extremely frustrating.”
Part of the problem is the track record and the confidence or lack thereof it inspires. “In previous years, the Revenue have been caught with web portals that frankly just didn’t give a good user experience in terms of consistent speed for each page in the process, good feedback on progress, and most important of all, no long time-outs or cryptic errors,” says Jones. “Time will tell as the tax return season develops, as to whether the Revenue have taken enough trouble to test their systems in advance on a ‘user-journey’ based approach; where each ‘journey’ is a core multi-page route that makes up part of the overall top-to-bottom process that visitors must complete in order to do the job online. If they have tested that way, and are monitoring now 24/7 on the same user-journey basis; then there’s a good chance that it’ll all pass off smoothly.” If not, he says, there is a significant risk that the Revenue will lose a lot of goodwill. He points to specifics that have gone wrong before, including accepting National Insurance numbers with lower case and then warning users it won’t recognise lower case, insisting on a four-figure format for a year and “forgetting” a value someone has just filled in, so that if a client has just filled in a form on a page and left a value out, they need to fill in all the details over again rather than just the portion they missed.
The Government, for its part, points to numerous advantages on its own website. You’ll know how much you or more likely your client owe or are owed immediately, it says, because the calculation is done automatically. The deadline for employed people is 30 December – it is 30 September paper-based filing, and the filling in and submission can be done at any time. Once the activation PIN is received, logging in is fairly simple, but woe betide anyone who logged on last year and has forgotten their details – there has been criticism in the past of people being unable to log back in after a period of time. You can also view your account (or that of your client) at any time to see what’s been paid and what hasn’t, although clearly Tucker believes this to be flawed in its implementation at the moment.
It could be worse. Whether people react well or badly to the idea that they should be submitting their returns online, we are a long way from the lunacy that prevailed when submitting VAT returns online initially attracted an extra cost for the privilege. Nothing like that has been mooted or even suggested by the most vehement critics. Online filing remains on track to happen universally over the next few years; it’s now down to the Government(s) during the intermediary period either to listen to the practitioners or not, which will determine whether the transition is welcomed or dreaded by the people who have to work through it.
Guy Clapperton is a freelance business journalist.