HMRC Is Shite

HMRC Is Shite
Dedicated to the taxpayers of Britain, and the employees of Her Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.

Wednesday, 13 March 2013

Is RTI The Panacea That HMRC Claim It Will Be?

My thanks to a loyal reader, who has posted the following comment concerning HMRC's inability to deal with matters "real time".

The reader makes the valid point that the system is incapable of transmitting realt time data between DWP and HMRC.

This clearly has implications for RTI and Universal Credits.

My question to those of you have intimate knowledge of the RTI flagship is, will RTI satisfactorily deal with, resolve and be able to cope with the issues raised by this loyal reader?
"An individual (me) has 2 forms of "income" which consists of a pension following 40yrs employment and a DWP minimum ESA payment of the taxable kind.

A succession of tax codings ends up with notification of 2013/14 to include an "underpayment restriction" amount of -£X, cue rapid query via endless wait on phone!

Pray tell me HMRC says I, what does this amount relate to and how did you arrive at the figure?
HMRC - We don't know what your income is going to be and we have to estimate it.

But says I (and herein lies the RTI scenario bit)

my pension is paid from you as my ex employer through the realms of MyCSP (my civil service pension) and your closest partner agency DWP pay me the reduced ESA, what gives?

HMRC states we don't know what DWP pay you (ESA taxed by HMRC via instructions to MyCSP as DWP can't collect the tax due for whatever reason) until the end of the tax year! Cue incredulity on my part at this stage as besides the fact that HMRC are estimating that which it is possible to calculate, by my calculations I am due to receive an inflation busting increase in my ESA of 14.65%.

So what does all this mean for the taxpayers of the UK?

I don't know what an incorrect tax code costs to put right but multiply it by the number of time my tax code has been "adjusted" in 6 months (7) and you begin to get the picture.

Then there is the "underpayment restriction" which unchallenged would result in a tax-free loan by the taxpayer - me, to HMRC, prior to the subsequent adjustment the following year.

Now, call me a cynic, but do you suppose that the vast majority of these adjustments are one-way and unethical?

So, what does it all mean?

Think carefully with RTI looming.

There is the archaic system of ESA taxed via pension provider - a system of taxation via third party involvement, with all the opportunities for mistakes along the line...

The system is incapable of transmitting real time information from DWP to HMRC.

Even with all the correct information to hand (i.e. its own and DWP data, HMRC is incapable of calculating "the right amount of tax at the right time".

HMRC obtains a positive balance in this area at the expense of the taxpayer, not creative accounting but certainly unethical especially during a reccesion.

What does that mean for the Universal Credit and RTI systems?

Over to you Ken.

Tax does have to be taxing.

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  1. It would only require part of this to be true to indicate what a total clusterf@*k HMRC is and RTI/Universal Credit are likely to be.

    How on earth have things been allowed to get to this stage, is the truth not being told, or is the truth not being listened to?

    On a different point, anyone have any idea how much money HMRC is wasting across its activities?

  2. Standby for a rebuttal from a spokesperson or shill stating that everything will be alright on the night.


    Time will very quickly erode those statements and show how useless the HMRC system is, the fact that this DWP link and its effects have been out of the limelight until now is disconcerting with what is now looming way above the horizon.
    A veritable tsunami of data and no high ground, moral or otherwise for HMRC to seek refuge upon.

  3. The Universal Credits IT Project at the DWP appears to be in tatters with the latest Program Manager lasting barely 4 months before being booted into the long grass amidst rumours that the contractors have been asked to stop working.

    Given that the link between the HMRC Tax systems and the DWP Universal Crerdit system was the major justification for RTI there is a good chance that HMRC will end up delivering something which will serve little or no purpose apart from causing SME untold grief and costs. That is if the thing functions at all once it is put under full load.

  4. Doomed I tell ye, doomed!

    This is going to be an almighty mess without a doubt and there will be some serious questions to be answered by more than a few people.

    Whither go pacesetter and lean now oh ye evangelista's?

    Time to clawback those bonuses and charge a few people with malfaescance in public office and a few other things as well when the truth is uncovered, as it needs to be.

    Credit to Ken and various others for their diligence and shame on you HMRC management!

  5. This is hilarious.

    I've no idea whether RTI will work. I agree that the IT track record doesn't bode at all well. At the very least there'll definitely be big teething troubles.


    The loyal reader's comment lists a number of the limitations of the current PAYE system which were specifically reasons why RTI was deemed to be needed. However, (s)he then presents these limitations, which are particular to the old system, as proof that the new one won't work. Surely I can't be the only one who finds the logic a little circular or who sees it as a bit ironic that most of his/her comment is specifically agreeing with the Government's case for introducing RTI!

    Rest assured, though, there will a whole list of new problems to complain about as RTI beds in. :)

    Stew G
    ...though maybe I should change my pseudonym to S Hill, as "stooge" no longer seems to be the insult of choice around here! :)

  6. Belief that DWP systems will interface in RTI with HMRC systems is sadly misplaced as evidenced in the open discussions appearing in the IT media.

    Even the PAC in the guise of Margaret Hodge have been waving flags relating to the impending disaster.

    The loyal readers comments are not so much hilarious as disconcerting, and while I accept we do not know what the outcome will be, readers of this and other informative sites are well aware of HMRC's rather pathetic and fiscally damaging track record with IT projects, and thats a fact not a belief.

  7. There appears to be a bit of confusion here surrounding the pension payments. Civil Service pension payments for ex HMRC employees are paid by Capita Hartshead Ltd, a private company. The sole purpose of MyCSP Ltd, another private company, is to calculate the employees Civil Service pension benefits before tax as at their last day of service. They then pass these figures to Capita Hartshead Ltd who make payment and deduct tax.

    I'm not aware if Capita Hartshead or MyCSP are involved with RTI but HMRC are not involved with calculating or paying pensions to their ex employees.