Crucial aspects of HMRC’s IT system appear to be dysfunctional as it is seeking to digitise, and it is costing taxpayers, says Bishop Fleming head of tax Andrew Browne
As the Making Tax Digital project enters its pilot stage, with the first tranche of taxpayers due to enrol in just twelve months’ time, it is astonishing and concerning that HMRC is unable to properly programme its computer to cope with one aspect of the tax system: the personal tax computation.
It has been revealed by HMRC in its instructions to commercial software houses that for the 2016/17 online filing season, personal tax returns will have to be filed on paper where in some cases dividend income is received. Trying to file online in these cases will lead to the taxpayer being overcharged by up to £1,000. A grand foul up if ever there was one.
Commercial software houses follow HMRC’s specifications when writing their own tax software, which includes replicating known errors. Failure to follow these specifications results in the tax return being rejected by HMRC’s server.
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