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Taxing times

Fri, 23rd Jan 2015

Earlier this month I met my accountant to go through my (very simple) yearly accounts. He made a throwaway remark about the trials of submitting tax returns to Her Majesty's Revenue and Customs online, so I asked him to elaborate. Twenty minutes later (as long as it took to deal with my figures) he was still going. Here's what he told me (the short version).

The HMRC computer system has crashed on him so often that he has given up using the website by day and only goes online after 10pm at night. Any improvement after that is relative: each return still takes an hour to file. There is a complicated login and logout procedure to be completed at both beginning and end (gateways and passwords) and for every file there are around 30 ‘noes’ to be clicked (are you in receipt of Job Seekers’ Allowance, child benefit, etc). If the system goes down before you get to the end, you go back to square one. The systems dealing with VAT and tax don’t talk to each other.

When the figures come back from the Revenue, the calculations have not been checked; my accountant says he now spends more time and effort correcting HMRC mistakes than doing the accounts in the first place. His productivity, and billing time chargeable to clients, are thereby both substantially reduced.

Raising queries on accounts is dysfunctionality raised to an art form. In a past life it was possible to discuss a case with a tax inspector, sometimes even one who familiar with the file. (My late previous accountant, a well-known inspector-gamekeeper turned accountant-poacher, was legendary for his epic rows with tax inspectors, usually after lunch, some of which he won, some he lost; I often felt a less abrasive approach might have been more productive, but gains and losses probably evened out over time and – the most important thing – after the row at least you knew where you stood.) The inspector is no longer accessible. Calls that get through (according to a recent Which? assessment one-third don’t) go to a call centre, which despite its impressive ‘Dedicated Priority Helpline’ moniker is essentially a message-taking service for logging and transferring queries to an ‘adviser’ somewhere in a back office. The adviser in turn is supposed to call back within a certain period. Since there is no way of knowing when this will be, it often happens that the accountant is not in to take the call. In which case the query is ‘closed’ and the process starts all over again.

This design is like something out of a Borgesian short story, performing the remarkable trick of making service dramatically bad at the same time as it permits HMRC agents to meet their targets and thus assert the opposite: the service is good. Magic! Under the only measure that makes sense to customers – the elapsed time taken to resolve a query – the service is dire, frequently stretching over weeks. But since HMRC uses measures related to activity (percentage of calls answered, percentage of calls handled within five minutes) rather than to purpose (resolving taxpayers’ tax issues), it has no knowledge of how good or bad its service is from the customer viewpoint, nor that its work backlogs are not the fault of bloody-minded customers but are self-created ‘failure demand’ – new cases that are actually old ones with a new reference number because they weren't done or done wrong the first time round. Predictably, because managers have no idea what good looks like for the customer, they pin improvement hopes on technology, this case in the guise of voice-recognition software, which equally predictably creates not economies but rage, despair, more failure demand and higher cost. As the late Peter Drucker said somewhere, nothing is so utterly useless as striving to do better what shouldn’t be done at all.

It’s worth recounting this litany because the new HMRC is touted as a flagship of public-sector reform. Some flagship. It’s actually a travesty of reform, a compendium of all the mistakes that have already been made in the private sector, plus a few twists of its own. Thus its IT-led, front- and back-office design faithfully replicates the private-sector scale thinking that has made banks, telecom and utilities a byword for dismal customer service. It has been implemented by big consulting and IT firms that have strong incentives to use expensive computer systems, at the expense of human beings and common sense. Also borrowed from the private-sector chamber of horrors is a reductive, predatory and ultimately self-defeating view of cost. Although it’s impossible to calculate with any degree of accuracy, the new improved HMRC will almost certainly have yielded no global cost saving. Adding insult to injury, however, as my accountant points out with feeling, the costs of the worsened service have been bodily shifted to the user, costs moreover that are difficult to recover since they are incurred in activities that add no value for the ultimate client. In short, what HMRC is a flagship of is what’s wrong with today's management – pretty much everything, in fact.


 

 


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User comments

Henning :: 25th Jan 15
WE stopped using an accountant nearly 20 years ago,after I retired, for a number of reasons. In all of that time, just by being sensible as to the time of day I call,I have usually had little trouble in getting through to HMRC on the telephone, and once through,being transferred if necessary to the right technical person. In recent years, I have used the online PAYE service, and have never had a problem of the kind Simon's accountant describes when using the accountants' version of the system. I don't usually check the website's calculations, as I don't have easy access to the various measures that are used. I suppose that our financial affairs are relatively uncomplicated, but they do involve foreign income and a number of bits that are specific to over-65s.
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