Legacy systems running UK's collector are taxing – in more ways than one
- Reference: 1739188998
- News link: https://www.theregister.co.uk/2025/02/10/legacy_costs_hmrc/
- Source link:
His Majesty's Revenue & Customs (HMRC) has estimated IT-related costs associated with major tax-related digital change programs to be £482 million ($598 million) in 2023-24.
Three of HMRC's eight most costly tax-related digital programs in 2023-24 involved remediation of legacy systems. By March 2023, these programs had seen whole-life costs increase by between 60 percent and 390 percent, with their life extended by between 21 months and 36 months as their scope changed, the National Audit Office (NAO) said.
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In its report, " [2]The administrative cost of the tax system ," the spending watchdog said that one of the programs, dubbed Securing our Technical Future (SOTF), included migrating HMRC's critical IT services onto new platforms. The program has now closed, but has "cost more than initially expected and has underdelivered due to unforeseen technical complexities and some funding in 2023-24 being moved to higher priorities."
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As of March 2024, 372 of 545 services had been successfully migrated and 49 had been remediated, leaving 124 legacy systems still in place.
"HMRC does not track how much of its digital costs are incurred maintaining and updating legacy tax systems, some of which are over 30 years old," the NAO said.
[5]
The Register has offered HMRC the opportunity to comment.
In 2020, the [6]NAO reported that cost-cutting at HMRC resulted in IT systems that "constitute a significant risk to the department."
In his write-up of HMRC's annual report and accounts (PDF), NAO comptroller and auditor general Gareth Davies said: "HMRC has recognised that, due to the need in the past to forgo operational maintenance and upgrades to its systems to secure cost savings, its IT systems now constitute a significant risk to the Department."
[7]Why does the UK keep getting beaten up by IT suppliers?
[8]UK tax collector's phone service 'deliberately' bad to push users online, say MPs
[9]UK aims to fix government IT with help from AI Humphrey
[10]£3.8B later, old tech supplier flames still burning for HMRC
The HMRC annual report for fiscal 2020 said SOTF was formerly known as Columbus Cloud, itself designed to replace [11]the controversial Aspire program , which was signed in 2004 and jointly contracted Capgemini, Fujitsu, and Accenture as suppliers in the £10 billion ($12.4 billion) agreement, which officially ended in 2017.
"This [SOTF] programme is focused on remediating high-priority technical debt and migrating our services out of existing data centres. However, it is acknowledged that there remains significant work to do if we are to address the levels of technical debt identified across the estate and create a more flexible, secure and scalable IT environment," HMRC's annual report said.
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In [13]a letter to the chairman of Parliament's Public Accounts Committee, Sir Geoffrey Clifton-Brown, HMRC chief executive Jim Harra said in November last year that digital programs had been hit by unexpected additional costs, "notably within the SOTF Program, due to enablement work that proved to be more complex than originally understood."
Costs for SOTF rose from projected estimates of £312 million ($387 million) in 2018 to £437 million ($542 million) in January 2024, he said. ®
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[14] https://whitepapers.theregister.com/
Yes, but WHAT SORT of legacy systems? Are we talking about an ICL mainframe, something more recent by Fujitsu or ICL, multiple racks full of x86 servers...
Or is it unmaintainable because somebody doesn't want to touch the software any more (Solaris on SPARC anybody)?
Even if the code runs fine and the hardware is whats hard to support it should be possible using eBay... to recover from failure during migration and find someone competent to migrate to a supported platform in a reasonable time frame at a reasonable price when the budget for the projects is hundreds of millions of pounds and they have Whitehall available to 'help'. I can understand that this software might well be complex to re-implement and require alot of grunt but IBM mainframes and x86 servers can offer a terabyte or more RAM multiple GB/s network bandwidth COBOL and FORTRAN are supported on Debian, RHEL9, and Windows. If the code needs to be rewritten or reverse engineered so they know what it does migrate to a supported platform with sane costs then run a long lived program to take the time needed to train permanent staff, how it works, and reverse engineer the organisation process information from it so that the organisation can manage that like a responsible customer and not leave it encoded in aging software.
COBOL and FORTRAN are supported on ...
But which dialects of Fortran or Cobol? One estimate put the number of possible *standard* Cobol dialects at over 100000, even without implementor defined features.
Then you have to take into account changes in the way that the language interacts with its environment: character encoding, buffering, disk file format, system calls, in Cobol f'rinstance how does one mark a deleted record ...
Migration aint easy - even if one does not have to do it in a rubber dinghy
Re: COBOL and FORTRAN are supported on ...
Point taken it's not easy. Even so you would expect a program with this kind of budget in a regulated environment to call out that risk at the start not years later or have enough resources to achieve it.
Solaris on SPARC is working just fine for myriads of organisations. You just need a plan to be off it in 5 years.
Solaris on SPARC is still fully supported, until at least 2037.
migrating HMRC's critical IT services onto new platforms...has "cost more than initially expected and has underdelivered due to unforeseen technical complexities
Really? A gubbuermint IT project under-delivering and over-spending? That's practically unheard of in the UK. Not to worry though, I'm sure 'lessons have been learned' and all the other usual PR dribble will smooth it all over.
/sarcasm
The irony isn't lost on me: it's our tax that's paying for this particular clusterfuck.
In 2023 Revenue in Ireland spent €585 million (£487 million) on everything operations wages projects.. building permanent infrastructure at ports. Technology was less than 14% of that. HMRC in the UK are planing to spend something approaching that on one IT program due to mismanaged legacy IT. At 14% the Irish revenue technology costs are circa £68 million they could run their technology for the life of this parliament on just this projects budget and it left over 100 legacy systems out. This is shambolic and embarrassing for the nation that in the form of ITIL literally wrote books on service management others have used and improved on to avoid these types of situations.
Revenue Eire (or whatever they'd like to be called) have a cost of revenue collection of 0.44% of the revenues collected, and that's appreciably better than the UK which is 0.51%. I suspect that the bulk of the difference is down to the greater complexity of the UK tax code. There's credible analysis by Munich and Padeborn Universities that scales the Irish tax code as being about 15% less complex than the UK (although there's little to choose between the UK, France, Germany and Spain). The more complex the tax code, the more chance for avoidance, and the higher the costs of collection.
"due to the need in the past to forgo operational maintenance and upgrades to its systems to secure cost savings, its IT systems now constitute a significant risk to the Department." (My bold.)
Pennies saved in the past are now costing many, many pounds.
And if the tax system falls over, they won't be able to get those pounds. Oh noes!
Tax doesn't have to be taxing.
You know what's funny (not really but anyway) they have seamlessly linked HMRC with the DWP systems so they can cut your benefits when you earn money instantly. Would you like to know the kicker?
When moving from a job to benefits you get your final pay. Actually you don't always get your final pay as there maybe some overtime or whatnot so you get it over 2 months. You pay tax on it and that's what they use so no benefits for you. The kicker is that at the end of the year that tax will get moved into the correct period for year end as it wasn't money you earned in the month it was entered into the system for tax purposes. You don't get anything back for that btw. If it goes the other way and your tax is moved to a period you received benefits you instantly get a bill to pay the benefit back. It doesn't matter what your thoughts are on the benefit system that isn't right.
The point here is how did they set this up to perfection (in their view) but they can't get the rest of it right? How are rich people avoiding tax altogether or getting a little slap on the wrist when they get caught? My personal view is we need to rip up the tax laws and just make it simple. Maybe one or two pages. No loopholes. No way for corporations or the rich to dodge it. Just make tax fair then we wouldn't need to spend 100's of millions on some antiquated systems not fit for purpose. Why does this have to be complicated?
I remember hearing a story about a thinktank in the Thatcher era (can't verify it so it's probably not true) but the idea was that someone in the thinktank suggested exactly that .... A flat rate of tax on EVERY pound you earn. No NI, no VAT, and none of the other hidden taxes, just a flat rate on everything. And the reason they were given why it would never happen was due to the 750,000 (parasitic) gummint workers that work for all the gummint departments that administer all of these 'additional' taxes. In a country with 'simple' tax laws there was no excuse to employ these people, so they'd all end up unemployed.
But I think it was probably more the fact that in a 'simple' tax regime there would be no way for rich people to hide their money, and they wouldn't end up paying less tax than the poor people!
"How are rich people avoiding tax altogether "
In the UK, the top 1% earn 12.5% of all income, and pay 29.1% of all tax*. And the top 50% of households pay 80% of all government receipts. Note on that last one, that it's gross receipts not net, if it were net receipts then the proportion paid by higher earners would increase.
* House of Commons Library research.
I'm not going to downvote because I know just how fucked up UC and DWP is.
But anyone calling for a "simple" system is a fool. It's the equivalent of saying lets get rid of these millions of lines of code and replace it a few thousand lines built from scratch. (And in the process probably forcing every single user to give up UIs and mobile devices and use a command line.) Those rules all do something. The rules determining what constitutes self employment would take up more than your two pages alone. And many of those rules have been written to close loopholes. And moreover I suspect, in your case, the problem were the benefit rules not the tax rules - so rewriting the tax rules would have had no effect.
Which is not to say they can't be simplified. And it should be simplified as an ongoing work. But it's complicated because people are complicated; we are not all spherical cows. And the rich get off because they heavily influence how the rules are written. And if we tear it up and start from scratch, they will still write the rules in their favour, and we'll likely end up hurting a bunch more poor people than currently git hit.
And many of those rules have been written to close loopholes.
That's the problem. Some bright spark of a chancellor invents a complex new tax rule, and the tax accountants soon find loopholes. Instead of fixing or simplifying the rule, the chancellor just adds new rules to close the loophole. Rinse & repeat, we get warts on warts on warts.
Paper worked fine.
They used to send out the forms. We'd fill them in and send a cheque. It worked. Then they forced us to do it digitally, which works OK if you can actually get past the security. But now it costs them hundreds of millions of quid a year paid to IT companies. I guess that's 'progress'.
If your tech isn't costing you less and making things easier, it is not a benefit and you should stop using it.
Re: Paper worked fine.
How many millions of quids a year did it cost them to pay for people who processed the cheques? And the system would still have to be entered into tech unless you want people doing it with calculators.
Re: Paper worked fine.
Look at the error rate in the 1950s before they started using computers to process tax compared to today - I bet that the number of people being mis-charged was 100x higher than it is today, at least.
There's a reason that taking humans out of the loop usually reduces error and waste, as long as they are programmed properly.
A Letter
The HMRC recently sent me a letter to tell me that my tax return was "outstanding."
It really made my day to get some praise from them, although TBH I don't even recall sending it to them!
When You Know A Decent Policy For "Growth"...Just Post It Here!
China GDP (1995 to 2025): Average growth around 11% per annum.
UK GDP (1995 to 2025) : Average growth around 2% per annum.
Now, just suppose that UK average GDP growth was around 5% per annum over the same period.
- EVERYONE would benefit!!!!
- Including HMRC!!!
But we've had thirty years of politicians who have NO IDEA AT ALL about the meaning of the word "growth".
...or about any national POLICY to encourage "growth"............................
...and in the mean time we have had PLENTY of politicians telling us that they "ARE DOING SOMETHING".......................................
Really???
Only 390%? Presumably Oracle are not involved. Or is this just early days?