US firm to oversee £1bn tax revolution

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The Independent Online
The Chancellor, Kenneth Clarke, is betting, on an enormous scale, that his own forecasts of the benefits of new information technology will deliver a lean and mean Inland Revenue by the millennium.

The changes planned by Mr Clarke include high-street tax shops, computerised do-it-yourself tax returns, and a small privatised United States-style Inland Revenue computer staff able to surf the information microchip highways.

However, there is growing disquiet in the ranks that Mr Clarke is gambling with untested technology that threatens to increase the costs of gathering Britain's tax revenue.

Yesterday's announcement that 12,000 jobs could be axed over the next seven years from the current staff of 55,000 assumes economies from office reorganisation, the removal of layers of management and improvements in computerisation of key areas of work.

The American-owned computer company EDS has already partially taken over the Inland Revenue's computer systems. Its £1bn deal is the largest government contract awarded for a decade.

For 9 million people, including the self-employed and many in the higher tax bracket, the aim is to implement computerised self-assessment by 1997.

Britain's accountancy profession is already preparing for the tax revolution. Self-assessment is supposed to allow the "electronic lodgement" of tax returns. Paper will be replaced by e-mail and digitalised returns.

Joanna Kay, marketing director of CSM, which develops accountancy software, envisages "either buying DIY tax software or walking into a high-street tax shop, like they already do in the USA, and filing your tax return by computer".

Reducing the current 1,000 tax offices in Britain and cutting Inland Revenue staff by 12,000 over the next seven years assumes the new technology will deliver the economies that will mean less of the £96bn collected every year being spent on collection itself.

However, upgrading the computer technology is proving more complex than expected, and EDS has privately told the Inland Revenue that it needs more time.

The Chancellor's announcement yesterday indicates that it is unlikely to win an extension to the 1997 deadline.