Criminal how FBI has failed taxpayers

As the self-assessment January 31 deadline looms up, form fillers hoping to save a tenner and a trip to the post office by filing by internet - FBI - might be better advised to stick to pen, paper and personal delivery at the local tax office.

Up to this weekend, just 30,546 have successfully completed online filing including payment by debit card - leaving nearly 9m self-assessment taxpayers outside the net.

Now a leading accountant has slammed FBI in its present form as "premature".

"This should have been run as a pilot so the Inland Revenue could learn, instead of a full-blown scheme," says tax expert John Whiting at PricewaterhouseCoopers.

Instead, it has bought more negative feedback to Inland Revenue computer systems which have already been subject to substantial criticism.

The tax people, who ditched advertising icon Hector the Tax Inspector this week, say that initial software download times of two to three hours have now been cut to 40 minutes using a standard 56K modem.

But it is still lengthy and the cost to those individuals after taking phone and any associated software expenses into the equation may well have outweighed the one-off £10 incentive on offer. It does not work on Apple Mac machines.

Anyone tempted to go online to avoid a £100 fine for late payment will need to act quickly. They will first need to register for FBI, which takes seven days - a time period which the Inland Revenue cannot explain. So far, 117,469 taxpayers have completed this process.

And they may have to do the calculations themselves. All that FBI provides is an online form filling facility.

So if you have freelance earnings of £10,000, a company car, dividends and interest and fall into the top rate tax band, you will still have to do all the sums yourself on backs of envelopes.

The alternative is to fork out around £25 for a separate CD-Rom, which will have to replaced for the next tax year, or ask the tax office for Tax Saver 2000 Lite, which is free of charge. The Inland Revenue's no-cost software also contains the program for downloading the self assessment return. Some 105,000 free disks have been sent out.

FBI was supposed to be the next big step in UK plc on line, the government's grand plan to make Britain the internet centre of the world. It should also have given the general public a hassle-free way to file self assessment forms with a few simple clicks of the mouse.

But it has turned into a costly embarrassment.

Although formally launched in April after chancellor Gordon Brown announced the scheme in the budget with the promise of a £10 discount for users, taxpayers were unable to file returns until July.

In the end the Revenue had to send people a free CD-Rom including a slimmed-down version of Microsoft Taxsaver 2000 software as the Revenue's own downloadable software was not up to the job.

In August the system was suspended while officials tried to sort out computer glitches which had led to a deluge of complaints from the public.

"The £10 payment for FBI is hardly a good return for the effort and expense individuals have to go through," says John Whiting.

The Inland Revenue says there are no plans to extend the tenner-off tax offer to next year. Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants says: "I think we should always embrace new technology where it works. But in this instance the filing system was put up when still in prototype form. The general public have been guinea pigs in de-bugging the system, which is not the way forward. It will have put people off who tried to use the system this year and could not get it to work."

"The Inland Revenue has jumped from the 19th century to the 21st without really putting its feet down in the 20th," said Anne Redstone, a chartered tax adviser with the accountancy firm Ernst and Young. "When it does work it is very neat and clean and efficient, but there have been delays and glitches."

Accountants have also had problems with the electronic lodgement system - ELS -aimed at helping them return forms from their clients.

"We still have to get clients to sign the forms so we ask them to send them by post with a free envelope. And it's so Kafkaesque that no one knows what to do with those signatures. We don't have to keep the filed and signed copy. ELS is a dinosaur," adds John Whiting.