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NAO backs HMRC on IT for Scottish tax

02/12/15

Auditor takes generally positive stance on the technology and data provisions for Scottish income tax

Preparations for the Scottish rate of income tax (SRIT) have met a generally positive response from the National Audit Office (NAO) in a report on the plans.

Pound_signIt says that HM Revenue & Customs’ IT arrangements are minimising the risks, and that it is taking the right steps in managing data in advance of the launch of the tax in April of next year.

The administration of the Scottish Rate of Income Tax 2014-15 highlights these as some of key features of the plans, which are being implemented as part of the transfer of more devolved powers to the Scottish Government following last year’s independence referendum.

The document stops short of an overall judgement, but outlines responses to a checklist of actions to be taken, many in line with the Office of Government Commerce Gateway review process. Despite some areas of caution it indicates that HMRC has been following the procedures to minimise problems.

Minimised risk

It highlights the fact that the department has built on its existing IT capability with a phased delivery plan that takes account of the changes needed for SRIT, and minimised the risks and costs of beginning to collect the tax.

The report says that HMRC has taken steps to overcome the lack of a dataset of Scottish taxpayers for comparison against its own by using third party data to verify the population data. This should provide reassurance on the completeness and accuracy of the data, and HMRC’s estimate that there are about 2.6 million income taxpayers in Scotland.

The main challenge it identifies is the need to ensure that address information is up-to-date, so it can identify people who are living in Scotland and who might be claim to be resident elsewhere in the UK. HMRC is encouraging employers and other organisations to encourage this, but also has to encourage taxpayers to keep it informed when they change address.

In addition, some of the small print in the risk register confirms that there is an action plan in place to ensure that SRIT is represented on HMRC’s Digital Roadmap – its long term timetable for digital projects.

Implementation costs

HMRC estimates the total cost of implementing SRIT to be between £30-35 million, of which IT will account for £10-15 million, over seven years from 2012-19.

Caroline Gardner, auditor general for Scotland, issued a statement that she has been satisfied that the NAO has sufficiently covered the key audit risks and is satisfied with its conclusions.

 

 

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