Speaking at a virtual Treasury Committee hearing on the impact of the covid-19 related measures on the workload and delivery ability of HMRC, head of the tax authority, first permanent secretary and chief executive, Jim Harra told MPs that in-house IT developers and outsourced IT provider CapGemini had been working 24/7 to complete all the preliminary code changes to create the new 80% furlough reporting portal with phase one testing with selected PAYE employers launched today. Sara White reports
8 Apr 2020
In the over-charged coronavirus pandemic period, where government policy is being rushed out at breakneck speed to try to counter the virus, HMRC has been put under immense pressure to deliver this government project within less than 10 days.
A project of this magnitude normally takes several years from initial announcement by a chancellor at a Budget to rollout and implementation. This was the case with Making Tax Digital, which was subject to endless delays over the years since it was first proposed; even now only the discrete VAT reporting element of the digital reporting system is mandatory.
The timescale for the delivery of the government’s Coronavirus Job Retention Scheme – commonly known as the 80% rules or furlough rules – is absolutely extraordinary.
The scheme was first announced on Friday 20 March at only the second coronavirus news briefing delivered by Chancellor Rishi Sunak.
This was only nine days after Sunak’s first Budget, and he himself only took up the role of chancellor a few weeks earlier following the resignation of his predecessor, Javid, following the reshuffle. Even at that time Brexit was still the primary concern for government and business.
The Budget was the first to be delivered amid the backdrop of a strong majority Conservative government and was presented to MPs on Wednesday 11 March.
At the time, hardened Budget analysts felt that the tax policy seemed relatively thin and unambitious, with an underlying emphasis on the pending threat from covid-19 rather than strategic or radical policy.
At the time, Sunak himself even confirmed that there would be a proper, full Budget in autumn 2020, as would be expected under the normal parliamentary cycle.
Phase one testing launched
HMRC has had only 18 days to turn around the project and Harra told MPs on the Treasury Committee, chaired by Mel Stride, former financial secretary at the Treasury, that today [8 April] HMRC had launched phase one testing with selected employers to trial the PAYE furlough online portal.
Phase one testing for the government’s Coronavirus Job Retention Scheme – aka the 80% furlough rules – has now started.
‘HMRC and CapGemini have been working flat out to make sure this scheme works, we started live testing today with a small number of employers,’ Harra told MPs.
‘We are confident that it will be able to handle the large volume of employers that will use it. It is important that the maximum number will be able to self-serve. We will be issuing guidance next on how to compile claims.’
The portal is set to open on 20 April for submissions from employers, giving a 10-day window to month end for PAYE payroll reporting.
Fortunately for HMRC, the last working day of the month falls on 30 April, a Wednesday.
Harra stressed that the only way to get the scheme to work would be to ensure it is driven by self-service as potentially there could be millions of claims and HMRC’s coronavirus business hotline would simply be unable to cope with a surge in calls on the day the site opened.
‘First of all many empolyers will be familiar with filing online PAYE returns or they will use an agent. Between now and the release of scheme, we will be releasing more detailed guidance.
‘The portal will be ready by 20 April,’ he told MPs. ‘There should be time to make payments before 30 April.’
MPs were concerned about the capability of the new HMRC furlough PAYE system.
Harra, a highly respected lifelong HMRC tax official, who took on the top HMRC job last October, is a veteran of Treasury Committee hearings, and was as calm and collected as ever.
With millions of potential furlough claimants through employer PAYE payroll, the task is daunting but Harra gave one of his typically composed answers.
‘We have tested the new system up to a 450,000 volume of claims an hour,’ he said. ‘The biggest challenge for us is to make sure the maximum number of employers can self serve so they do not have to contact us. If they did, we would not be able to provide the level of service on our helplines.’
When questioned about the number of HMRC staff working on the helplines and how they would cope on the 20 April launch day, Harra said: ‘We have about 2,000 colleagues on our helpline, we are looking to redeploy 3,500 staff to that work and we are working with private sector suppliers in case we need more.
‘We are working with the Chartered Institute of Taxation (CIOT) and ICAEW, so that they are able to provide support to their members, and we’ve worked closely with them and key stakeholders on this [furlough scheme].
Obviously if a million employers decide to ring us on the same day, then I won’t be able to handle that
Jim Harra, CEO and director general, HMRC
HMRC is relying on the professional institutes like ICAEW and CIOT, accountants, tax advisers and businesses themselves to learn the new system before it launches and understand the tax compliance requirements for PAYE furlough reporting.
Time is not on anyone’s side at the moment, a factor which was repeatedly raised by the Committee, who were clearly extremely concerned about the devastating economic and individual costs of the pandemic, with all MPs on the committee inundated with questions from constituents.
Guidance is being updated every few days but it is still quite vague and sketchy compared with normal style HMRC guidance. There is limited information on concrete tax compliance issues nor absolutely clarity on eligibility, with a sweeping caveat that it is open to all businesses but they must be ‘severely’ affected by coronavirus.
More detailed technical guidance is due to be released.
Harra said: ‘We are working hard to get that guidance in place.’
How has JRS changed HMRC
During a long and testing session, which ran to nearly three hours, MPs gave Harra a break from the heavy duty grilling for a moment, asking him how the Coronavirus Job Retention Scheme (JRS) had changed HMRC and what kept him awake at night.
In a considered and moving reply, Harra said: ‘We [HMRC] have been profoundly affected by the coronavirus… before this we had about 18% of HMRC people working at home, now we have 80% working at home.
‘My colleagues are all ready to do their bit, but I am sure we wil be calling on people’s patience. This has shown we can do things we did not think we could do. I do fear that in the future ministers will expect everything to be delivered within one month.’
Report by Sara White, Editor, Accountancy Daily, Published by Croner-i Ltd