Can we make tax collection fit for purpose?

Delays in processing income tax assessments have, over the years, seen the office close to visitors for periods, stop taking phone calls on set days of the week, and various other initiatives, none of which has been seen to have any lasting impact.

Last week it came to light that the impact of the delays in processing assessments has meant that repayments due to islanders were subject to the Revenue Service’s own ‘reverse penalties’ system of some £195,000 last year, because the repayments were delayed by more than 12 months.

On the basis that that £195,000 equates to 5% – the rather generous ‘interest’ rate offered by the States – of the total repayments due, that would mean that nearly £4m. due to be returned to taxpayers was held back for at least 12 months.

And we have no idea how much might have been repaid after 11 months, and thereby not attracted the so-called supplement.

It’s a strange kind of logic that sees the Revenue Service underspending some £640,000 on staff costs in 2021 – due to difficulties in recruiting – and end up paying out the best part of £200,000 of that on supplements that, in a normal course of events, should be avoided.

Now Policy & Resources is prepared to pay up to another £300,000 to find short-term staff – including former members of staff at the Income Tax Office – to tackle the backlog of returns. It still leaves the States in the black financially, though it’s surely not a way anyone would seek to go about their business. Clearly it’s not a deliberate move, but these problems have existed for long enough for it to not surprise anyone.

The process of digitising income tax, now in its second iteration, has had some successes but also apparently some snags, and we are still to see if the new mygov portal can have any significant impact.

But any government operation which comes with an annual ‘apology fee’ of £200,000 is surely unsustainable, and needs to be addressed with more than expensive sticking plaster solutions.