Can DWP/HMRC really deliver on RTI?

On 28 March, the online resource AccountingWEB raised concerns over HMRC’s ability to deliver on RTI along with all the other technical innovations and improvements HMRC is hoping to introduce.

“Even people within the technology industry itself are beginning to doubt the practicality of [HMRC] trying to deliver so much technology change so quickly.”

AccountingWEB quotes Andrea Leadsom, a Tory MP and a member of the Treasury Select Committee, who is reported as saying to The Times, “HMRC are struggling to do even what it’s meant to do: properly calculate the tax due from people… HMRC is completely broken, it’s not vaguely incompetent, it’s utterly kaput.” Strong words!

As we know, RTI is a foundation building block in the Government’s introduction of Universal Credit in October 2013, a new benefit that will replace the current variety of in and out of work benefits. Universal Credit will be run by the Department for Work and Pensions.

Universal Credit will be paid claimants based on their real-time earnings, and will change dynamically as a claimant’s income rises and falls, or they come in and out of the workplace. Universal Credit is absolutely dependent on HMRC providing the necessary RTI data, which data will flow in real-time from employers every time employees are paid.

Therefore, there needs to be new IT systems to enable HMRC to accept and process incoming RTI data from employers and to link this data to DWP’s new IT system to administer Universal Credit. But will DWP be able to deliver on their end of the new technology?

Back in September 2011, the Public Accounts Committee published a report on reducing costs in the DWP. Commenting on the introduction of Universal Credit, the report states: “…the introduction of Universal Credit is dependent upon the successful implementation of new IT, and this requires effective resourcing of the IT back office support services in the Department.”

However, the report considered that DWP have “insufficient contingencies in place and services could be adversely affected if things do not go to plan… Too often this Committee has highlighted examples in other government departments where IT systems or projects have gone off track and emerging problems have gone unchallenged by staff.”

But what about HMRC’s end of the technology changes. HMRC’s part in developing these new technologies”, says the report, “is vital to the operation of Universal Credit.” Describing how HMRC intends to have the Universal Credit IT system delivered for testing by April 2013 prior to implementation six months later, the report states that “failure to meet this timetable could increase costs and have a knock-on effect on other [Government] budgets and costs reduction plans.”

It is this RTI timetable that could be the undoing of all the Government’s plans for Universal Credit. This is because no-one knows if the RTI pilot will really work and achieve the desired results within the time constraints. HMRC hopes to have over a quarter of a million employers voluntarily sending RTI information to HMRC between November 2012 and March 2013. Then HMRC only has another scant six months between April and the end of September 2013 to require a further 1.6 million other employers to start submitting RTI data to them.

With so much riding on RTI you would imagine that this would be at the top of HMRC’s list of priorities? This doesn’t appear to be so according to HMRC’s latest Capability Action Plan. In her forward to the Plan, Lin Homer, the new Chief Executive and Permanent Secretary, HMRC, only comments that one of HMRC’s priorities is to “assess the department’s ability to meet current and future challenges.” She makes no direct reference to meeting any RTI priorities.

In the body of the Plan, the only mention of RTI is: “HMRC will continue to work with DWP in the design and implementation of Universal Credit, supported by the development and delivery of Real-Time Information. In April 2012, HMRC will launch a pilot of the new Real Time Information (RTI) system, with employers, software developers, and pension providers.”

Sounds all very relaxed, doesn’t it? Do you detect any note of urgency? Any feeling that delivering RTI on time is very far up any list of HMRC priorities for the coming tax year?