Revenue Service costs up £5m+

Thursday 13 October 2022

The budget for improving the States' collection of revenue has increased by another £5million in one-off costs and by more than £1m a year.

The Policy & Resources Committee agreed on Tuesday to put up the capital budget for its Revenue Service from £18m to £23m. At the same time, it allocated the Service a further £1.2m to £1.3m a year in running costs.

The Revenue Service was created to bring together the collection of income tax and social security contributions. This has required extensive changes to IT systems at the same time as the covid-19 pandemic disrupted normal collection business. 

The Committee explained the budget increase when it appeared at a public hearing of the Scrutiny Management Committee yesterday afternoon.

"We were asked to vote some further money towards fixing the implementation of the new system – that was £5m and then there was a recurring cost in terms of staff to ensure the service is up to date," said Deputy Mark Helyar, the Policy & Resources Committee's treasury lead.

"Clearly, if we don’t collect revenue, we can’t pay for public services, so it’s absolutely essential that service is performed correctly."

Pictured: Deputy Mark Helyar revealed that the day before its hearing with the Scrutiny Management Committee, the Policy & Resources Committee had increased the capital budget of its Revenue Service by more than 25%.

The Policy & Resources Committee's President, Deputy Peter Ferbrache, said that the additional budget approved by his Committee on Tuesday should allow the Revenue Service project to be concluded.

"We were asked, which we approved, for an extra £5m of capital," said Deputy Ferbrache.

"£16m has been spent of an £18m budget. But above the £18m, £5m is needed to bring the project up to finality – all the recommendations that were considered dealt with and that the system is fully functional and delivering the better service that it should do.

"The other figure...is a revenue figure – somewhere between £1.2m and £1.3m, in addition to extra costs that are going to be incurred annually.”

Deputy Ferbrache said the Service faced challenges as a result of "a mismatch of old [IT] system and new system and needs to get completely into the new system".

Deputy Simon Fairclough, who was sitting on the Scrutiny Management Committee's panel, asked for confirmation that the numbers quoted "were not originally budgeted for and are additional expenditure". Deputy Helyar replied: "Yes - and it’s something we would like Scrutiny to look at in the Agilisys contract."

Pictured: Deputy Simon Fairclough asked the Policy & Resources Committee whether it believed that customers were seeing improvements at the Revenue Service.

The Revenue Service has been struggling with a large backlog of income tax returns.

Early this year, an appeal was launched for former staff to return to help clear the backlog. In July, the States said they were making "significant progress" clearing personal and business forms. 

"Since then, they've caught up even further," said Deputy Helyar yesterday.

"We're working through it. Staff are working very hard. They've done an amazing job this year."

Pictured: An appeal for more staff earlier in the year has helped the Revenue Service work its way through some of its large backlog of tax returns.

In 2023, the States will introduce independent taxation. This means that people who are married or in a civil partnership will be recognised as individuals rather than as a couple and have responsibility for their own tax affairs.

Deputy Helyar said that this change inevitably adds to the workload of the Revenue Service.

"Now we are going to a taxation basis where men and women are being taxed independently of one another, if they wish to have it done that way. It has effectively created 12,000 new customers for the system," said Deputy Helyar.

"Out of a surfeit of wishing to be fair, the States have created themselves another complicated problem to fix that will cost more money."

READ MORE...

Progress on income tax backlog