HMG obsession with Digital

lindsay

lindsay

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Lindsay
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I am getting so annoyed by the obsession of the government - specifically I suspect the civil service in the Treasury - to make everything "digital by default". This manifests in particular as requiring businesses to invest in software to electronically submit company information - tax return, companies house returns, self employed tax returns etc - to HMG systems. The latest MTD requirements affecting self employed/sole trader businesses are particularly intrusive, not only requiring the expense of having software to do the job (or an accountant who will charge extra for the quarterly rather than annual returns) but as a consequence requiring quarterly payments of tax on account based on quarterly turnover. We all know how quick they are to demand payment and how slow to return rebates.
The thing that has got my goat todaty is that I've just been submitting the Ltd Co accounts for TP Media Ltd and whilst it was fine for the HMRC return, the Companies House return submission has stalled, because their compiuter system can't handle the job. I had this with my contracting company return a month ago. The submission that should return a Success response at most a few minutes later, just sits there and will take days to be provcerssed, all the while leaving a spinning wheel of death icon in my submission software. Grrr! Get your own house in order, Companies House, who put up the cost of their annual return by the way from £13 in 2024 to £34 in 2025 and now £50 this year. It used to be cheap because it was a simple form with few fields that needed to be entered into a record by CH; now it's been complicated by some extra info required to cater for the few bad directors and company owners who commit fraud, and computer systems that don't work.
 
lindsay said:
I am getting so annoyed by the obsession of the government - specifically I suspect the civil service in the Treasury - to make everything "digital by default".
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You have my sympathy.

My guess is that this whole thing starts with far too many "Ministerial jobs", There are 23 Cabinet level ministers plus 60 Junior ministers and each of these will be meddling with the efforts of the Civil Service to make things work properly. My experience of the Civil Service is that it's staffed by good, sensible people who spend far too much time trying to make sense of the politicians' current obsessions. :(
 
Whilst I agree in general Andrew, my experience in the Home Office is of Directors (G5 level) trying to make their mark with some new catchy, progressive-sounding policy. EG Digital by Default, Agile First, Automation by Default...each time discarding anyone and anything that doesn't fit. These are Directors who willingly manipulate reports to only tell Ministers good news - again first hand experience. I have a lot of sympathy with new Ministers in a department trying to find out the truth about what is going on in their new remit. Sure there are some excellent civil servants, but also plenty of deadweight and plenty of people with more ambition than ability.
 
lindsay said:
Whilst I agree in general Andrew, my experience in the Home Office is of Directors (G5 level) trying to make their mark with some new catchy, progressive-sounding policy.
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I'm afraid my experience at the Home Office was short and innocuous, writing a specification for a system change. The SEO I worked to there was a good bloke, as were all the SEOs and Prins (now G7s and G6s) I worked with. The only assistant secretary I ever met at work was competent but the sort of bloke who made you think you should count your fingers, after shaking hands.

Mind you, a lot of directors in commercial companies that I worked with engendered similar feelings of trust. :(
 
I was there at G6 level but not a civil servant, so I was closer to the machinations of the career types.
 
The thing with the making tax digital is that ultimately it will not just be the summary figures uploaded, but all the underlying transaction data(such as invoice numbers and totals). Hmrc will then cross reference company A’s data against company B’s data, alongside bank transactions etc to identify discrepancies and tax evasion.

I am sure that at some point it will become mandatory to include supplier and customer VAT numbers and other identifying information on all relevant b2b transactions…if not a full e-invoicing mandate similar to France etc.
 
Sadly I agree Jon, and whilst it could be argued that this would prevent possible fraud, it makes business more onerous and expensive - most self employed/sole traders will have to use accountants who will charge more and more for all this. Most will quietly acquiesce but it will certainly drive more into the cash only / black market.
 
I'm a big fan of the Gov UK site and imo one of the best things they've ever done. I can't speak for business owners, however all my interactions with the Gov in the last 5 years have been straight forward

Passports, driving licence, council tax, hmrc are miles easier now than they were back in the 2010's

I would hope big tech would jump on the bandwagon to compete against these accountants you mention and there is still work to do not to leave vulnerable people behind, but all in all a 21st century British government success ( we don't get many of those!)
 
Corporation tax avoidance amongst smaller businesses seems to be getting very high. I assume this is why these draconian systems are being foisted upon us.

Interesting article on who isn't paying and where the tax gaps are.

taxpolicy.org.uk

Andy Burnham, the tax gap, and raising £15bn without a tax rise

Andy Burnham wants more tax revenue. Tax gap statistics show how £15bn could be raised without increasing tax rates… just collecting tax already due.
taxpolicy.org.uk taxpolicy.org.uk
 
lindsay said:
...most self employed/sole traders will have to use accountants who will charge more and more for all this.
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On the current trajectory, this is true.

However, if the government thought along logical lines (a first, I know) they could sponsor a competition for open source developers to build a cross platform accounting system, for small to medium businesses. The winning entry could be handed out freely from .gov.uk and that would be the only authorised way to access the system.
 
lindsay said:
I am getting so annoyed by the obsession of the government - specifically I suspect the civil service in the Treasury - to make everything "digital by default". This manifests in particular as requiring businesses to invest in software to electronically submit company information - tax return, companies house returns, self employed tax returns etc - to HMG systems. The latest MTD requirements affecting self employed/sole trader businesses are particularly intrusive, not only requiring the expense of having software to do the job (or an accountant who will charge extra for the quarterly rather than annual returns) but as a consequence requiring quarterly payments of tax on account based on quarterly turnover. We all know how quick they are to demand payment and how slow to return rebates.
The thing that has got my goat todaty is that I've just been submitting the Ltd Co accounts for TP Media Ltd and whilst it was fine for the HMRC return, the Companies House return submission has stalled, because their compiuter system can't handle the job. I had this with my contracting company return a month ago. The submission that should return a Success response at most a few minutes later, just sits there and will take days to be provcerssed, all the while leaving a spinning wheel of death icon in my submission software. Grrr! Get your own house in order, Companies House, who put up the cost of their annual return by the way from £13 in 2024 to £34 in 2025 and now £50 this year. It used to be cheap because it was a simple form with few fields that needed to be entered into a record by CH; now it's been complicated by some extra info required to cater for the few bad directors and company owners who commit fraud, and computer systems that don't work.
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It is not just the computer systems that do not work, the departments do not appear to interact very well either. A couple of weeks ago I requested some information that would enable me to file my return, I received an e-mail informing me that it would be sent through the post within 10 days, when the letter did not appear I e-mailed back commenting that the delay in receiving the information, mandatory to filing the return, would result in delay beyond the filing date. Then I received another automated e-mail which referenced another department and gave them 10 days to reply to my e-mail. I e-mailed again that the delay at their end would cause delay at my end. I then received another email which in summary stated that the company would be placed on a blacklist, I would be automatically held in breech and then would have to go through an appeals process.

It just seemed bonkers, the Ai and automated side of things worked very well, the Ai seemed to be reading my e-mails, trying to work out the meaning and then forwarding on to the department where there are just not the resources for a human to actually read my e-mails and put two and two together. It's a bad look for the government regards small businesses, and many will not think that it is worth the hassle.
 
Anbsolutely agree Wayne, added to the 2 hour + hold on their telephone enquiries lines, they are just forcing people into default fines or paying more than necessary. But then HMRC have much form for that, including an outsourced "Behaviour Management Unit" that generates threatening letters.
 
lindsay said:
Anbsolutely agree Wayne, added to the 2 hour + hold on their telephone enquiries lines, they are just forcing people into default fines or paying more than necessary. But then HMRC have much form for that, including an outsourced "Behaviour Management Unit" that generates threatening letters.
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Telephoning any company for any information is virtually pointless these days, " we are experiencing a very high volume of calls at this time" are the first words out of the Automated Systems repertoire. I think to myself that it is an admission of their incompetence and miss management such that they have such a high volume of calls to begin with, When you finally do get through to a "real person" the standard of their training is so high that they are also "automated" and will argue for ten minutes over an action that could be carried out in a couple of keystrokes and 30 seconds,
 
Barney said:
...and will argue for ten minutes over an action that could be carried out in a couple of keystrokes and 30 seconds,
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There are companies that invest in recruitment and training but even the best of them are too often railroaded by government obsessions.

One example is Zen, the internet and telephone company, which regularly wins prizes for service and support. We've been with them almost from their beginning and never had any problem that they failed to fix fast and properly. However, this landline shutdown seems to have stumped even them. I got a call from a salesperson about options for the changeover. I asked them to put the suggested next steps on an email or a letter (yes, they still use the Post Office, when appropriate) and this is the first time they've failed to deliver.

I've already worked out what we'll do, so at some stage I'll give them a call and sort it out but it just proves that old line from Friedrich Schiller: "Mit der Dummheit kämpfen Götter selbst vergebens" (Against stupidity, God himself struggles in vain).
 
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My daughter is a partner in a accountancy firm , Doing tax once a year was bad enough , Now having to do it 4 times a year
is a nightmare,
 
sorry @lindsay but i disagree *strongly the amount of tax evasion especially through the cash black economy in the UK is staggering and even so called legit little businesses are at it at a huge level, recently i have been doing a small house up in the UK for sale and we got a few trades in to do certain things and they all offered a discount for cash, it wasn't much but i said no i only pay by bank transfer to a nomanted business account and get a full invoice.
 
There's no doubt that MTD costs businesses more. I now have to subscribe to my accounts package, because the version I paid for doesn't do online submission. And my accountant's fees have gone up loads.
 
Mr Bump said:
sorry @lindsay but i disagree *strongly the amount of tax evasion especially through the cash black economy in the UK is staggering and even so called legit little businesses are at it at a huge level, recently i have been doing a small house up in the UK for sale and we got a few trades in to do certain things and they all offered a discount for cash, it wasn't much but i said no i only pay by bank transfer to a nomanted business account and get a full invoice.
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Is that your first one?
 
Mr Bump said:
sorry @lindsay but i disagree *strongly the amount of tax evasion especially through the cash black economy in the UK is staggering and even so called legit little businesses are at it at a huge level, recently i have been doing a small house up in the UK for sale and we got a few trades in to do certain things and they all offered a discount for cash, it wasn't much but i said no i only pay by bank transfer to a nomanted business account and get a full invoice.
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I'm not saying it doesn't occur, I'm saying that MTD will have the opposite to the desired effect. More will go "black" in the face of increased bureaucracy and costs.
 
lindsay said:
I'm not saying it doesn't occur, I'm saying that MTD will have the opposite to the desired effect. More will go "black" in the face of increased bureaucracy and costs.
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In my experience, the higher up you go Lindsay, the benter they are.
 
I think part of the issue is the constant pressure for all Government departments to do "more for less". Staff usually being the most expensive overhead for a business; at a very senior management level it's easy to understand why pitches for software /AI solutions are very tempting.
I note mention of long delays to the HMRC helplines but in reality it's a question of where do you deploy staff ? Increase the compliment on the phones and it's probably not long before media pressure moves around to why aren't HMRC catching tax dodgers / evaders ?
Increase the entire workforce and the question becomes why do we have so many civil servants ? I guess it's always going to be difficult to square the circle
 
taxboy said:
I guess it's always going to be difficult to square the circle
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As an outsider who's worked with several departments, my opinion is that it's just another case of lions led by donkeys.

My experience is now about fifteen years out of date. However, I always found that, up to principal officers, the staff were as good as you found in any commercial organisation and often better motivated. It seemed to be that further up the ladder, people had a tendency to lose the plot.
 
One of the problems in HMG IT across departments is that they are in hock to Microsoft and Amazon, for both software and server hosting. Much now resides in Azure and AWS clouds, mostly it is true on UK sites but obviously with strategic control by US-based companies. Just like the F35 programme in Defence, a level of control has been handed over to a foreign state. I would like to see HMG IT taking up some of the initiatives that the EU are adopting to use European software and resources instead of US ones. Those US companies will obviously encourage their HMG clients to take up their AI tools that have had vast amounts of R&D cost sunk into them, in an effort to recoup that investment. It seems that IT Directors in government are only too keen to do that, to add to their cv's for when they move outside the civil service.
 
Is the current self assessment software still based on a system they bought from the Americans who had bought it from the Australians who had abandoned it as useless?
 
lindsay said:
It seems that IT Directors in government are only too keen to do that, to add to their cv's for when they move outside the civil service.
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It didn't used to be like that.

From the early 1980s I spent thirty five years in and out of various departments. To begin with, there was a lot of "Buy British" push coming down from the rooms at the top. Sometime in the late 1990s it started to change and "why not use Microsoft" became a recurring theme.

I was seldom involved with the heavy metal end of things so all I was seeing was the desktop side and even when the first talk of the EU Linux proposal came along, certain people were clearly being wooed by the Microsoft lobby.
 
Mr Bump said:
sorry @lindsay but i disagree *strongly the amount of tax evasion especially through the cash black economy in the UK is staggering and even so called legit little businesses are at it at a huge level, recently i have been doing a small house up in the UK for sale and we got a few trades in to do certain things and they all offered a discount for cash, it wasn't much but i said no i only pay by bank transfer to a nomanted business account and get a full invoice.
Click to expand...

I would argue it's changed to quite the opposite. Cash has become far more difficult to acquire and deposit now, with even the banks watching closely and reporting anything suspicious. High level organised crime will not want the hassle of cash, the fraud will more likely be in the activity, paperwork and reporting instead.

Even the cash in hand stuff with tradesmen etc has to be limited because HMRC is loaded with algorithms where they know roughly what a certain trade should be declaring. HMRC Connect can also check spending, lifestyle habits etc to see if things correlate.

Of course it goes on with cash, but individually it will most commonly be small scale, so policing it is going to be very time consuming and expensive, despite perhaps the larger cumulative impact. This is probably one of the reasons why Rishi was so keen to introduce digital currency to replace cash.
 
gman said:
This is probably one of the reasons why Rishi was so keen to introduce digital currency to replace cash.
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In my opinion, he was the only sane member of that political party's hierarchy and I get the impression that they hated him for it.

Digital money is a good idea but it seems to me that it requires a major change of attitude to make it work properly. The most important thing would be the introduction of some form of digital wallet that can receive and pay out with high security. Such a tool would have to be very simple to use, if it is to replace cash successfully but it would still need to have several levels of security to make theft pointless.

Above all else, such a device would have to be specified, designed, built and distributed by the UK Treasury, just as cash is at the moment. Let a commercial organisation near the project and it will turn into a disaster.
 
AndrewFlannigan said:
In my opinion, he was the only sane member of that political party's hierarchy and I get the impression that they hated him for it.

Digital money is a good idea but it seems to me that it requires a major change of attitude to make it work properly. The most important thing would be the introduction of some form of digital wallet that can receive and pay out with high security. Such a tool would have to be very simple to use, if it is to replace cash successfully but it would still need to have several levels of security to make theft pointless.

Above all else, such a device would have to be specified, designed, built and distributed by the UK Treasury, just as cash is at the moment. Let a commercial organisation near the project and it will turn into a disaster.
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I'm not against digital currency, but it can't replace cash nor should it be programmable. Both big no-nos for me.
 
gman said:
I'm not against digital currency, but it can't replace cash nor should it be programmable. Both big no-nos for me.
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I can see your point.

For such a system to be accepted, it would have to meet the same standard as Caesar's wife. More than that, it would have to be user friendly in every way. Above all, it must be easy to understand for everyone. I think it should only have three functions: receive money, send money, show the current total. There should be no bells or whistles and the security would have to be constantly proven. As flaws are discovered (and they always will be) there would need to be a simple and reliable update system.

I'm definitely not talking about a big bang here. For such a system to work it would need to be rolled out slowly and carefully over several years, possibly over several decades. Moreover, once the usability specifications are set they should never be changed. We're already part way there, with ever more people using electronic transfers for their transactions and this should be handled as a slow transition, definitely not a "big bang".
 
I can't see how a digital currency could work in such a simple and comfortable way. Remember, current money circulates (whether cash or non-cash) through banks' settlement (nostro and vostro) accounts, where value is traded using LIBOR interest rates between institutions, and also banks can lend 8 times their actual holdings of liquid funds. How do you do that with digital currency that is not traded through institutions? Too much money is made by institutions trading in the dark where ordinary folk can't see, for there to be any incentive for commercial interests. It happens with bitcoin etc exchanges because exchanges charge fees for transactions and do their own trading in virtual currency that most likely doesn't exist in people's wallets.
 
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