Headlines: March 14th, 2001

Pathfinder services from the Inland Revenue and Customs and Excise are setting the model for online transaction processing. The early planning of e-government provided for a range of models for tax payment. They included private sector organizations, such as Accountants, handling transactions and either receiving a fee from the government department, or adding value to the service, for which the customer paid a fee. It is now clear that central departments prefer to keep the processing ‘in house’ and are reluctant to create a market opportunity for the private sector.Currently Inland Revenue provide online processing for ‘self assessment’ taxpayers and from April they will offer employers an online service for PAYE and tax credits. Customs and Excise will launch an online VAT service also from April. This follows a successful pilot launched in April 2000.

On line transaction processing has considerable benefits for the departments concerned. Handling forms and keying data are eliminated. In addition, because the systems check inputs for completeness and credibility most of the errors common to hardcopy forms are eliminated. There are no published estimates of likely savings. Some of these cost savings will be shared with taxpayers. ‘Self assessment’ taxpayers receive ten pounds for an online
return. Employers will receive a one off payment of 50 pounds for PAYE and a further 50 pounds if they submit information about tax credits. Submitting a VAT return on line will also result in a 50 pounds one off payment.