Blogs

Chinese water torture, HMRC style1

IT | Ian Clark | 15 Feb 2013

Charity IT systems won't have enough time to prepare for the HMRC's upcoming Charities Online system, says Ian Clark, who pleads for a comprehensive outline of the new system as soon as possible. 

First the good news. HMRC is introducing a new Charities Online system this Spring. This should speed up the processing of gift aid and similar tax refunds considerably, and reduce charities’ (and HMRC’s) administrative costs. The voluntary sector needs to say a big thank you to HMRC for making this investment, following years of sector campaigning to try and drag gift aid processes into the 21st century.

Now for the bad news. HMRC are drip-feeding information about the new system into the public domain in ways reminiscent of Chinese water torture or the dance of the seven veils:

• A sketchy outline of how it will operate appeared at the end of last November.
• Just before Christmas an important concession for charity shops (which will reduce the number of gift aid letters they have to send to donors of goods for resale) appeared in an obscure press release. It is still not even referenced on the main HMRC Charities website.
• In mid-Jan there was a little more detail on how the new system will operate, and a couple more important relaxations (on aggregated claims and sponsorship claims) that should reduce the paperwork.
• Then earlier this week (11 Feb) a few further tantalising details, including the expected start date for Charities Online registration which is due to start registration on 22 April 2013.
• Further details are expected in March, followed by HMRC’s usual advice guides covering most typical situations as well as less common circumstances, probably in April.  
• Everyone will be expected to have switched to the new systems by the end of this September, a ridiculously short timeframe for charities and CASCs that need to implement significant IT system changes.

This slow drip feed of snippets of new information by HMRC is of no help to most charities who need to plan for a smooth transition to the new systems. Critical information is still lacking, so internal processes cannot be re-designed with any certainty, or training planned, or pilots run.

What the voluntary sector urgently needs is the full picture from HMRC, not a prolonged drip-feed. Then the 120,000 gift aid registered charities/CASCs can each evaluate their own particular situation and plan for the new requirements. Then we needs a transition period that is realistic in the real world of IT, not one arbitrarily dictated by HMRC internal constraints and budgets.

Fortunately the vast majority of charities will probably be able to use the main HMRC spreadsheet-based approach fairly easily. But unfortunately these charities only process a minority of gift aid claims, whether by number or value. The large volumes of both claims and money are channelled through a few thousand charities (or their agencies) using complex (often tailored-made) databases and software packages.

It has taken nearly two years for HMRC to design and implement their new system. Now they expect charities and their software developers to drop all their other projects and modify existing complex systems in a far shorter timescale. I suggest the transition deadline for charities with complex IT requirements be extended until at least March 2014.

Please HMRC, treat the sector in an adult fashion. You’ve worked very hard to make your centralised operation more effective. Thank you. Now help us to do the same on our side by giving us now all the information we need to cope with our tens of thousands of different situations.

Directory: HM Revenue & Customs (HMRC)
Who's Who: Ian Clark