Taxation in Great Britain has a colorful history. There's the legend of Lady Godiva who rode naked through town on a horse to protest high taxes. Later on, King Charles I was beheaded, in part, because of his battles with Parliament over the rights of taxation.
But today, Britain is firmly focused on the future when the subject of taxes comes up. Seven years ago, when Tony Blair became Prime Minister, he set out to give the United Kingdom a competitive edge in the field of electronic commerce, according to Barry Glassberg, director of eServices at Inland Revenue, the country's national tax agency. "Blair wanted the government departments to be exemplars of everything electronic," he said.
Glassberg added that, at the time, Blair probably wasn't sure what he meant by that, but would have told you, "I'll know it when I see it." Today, the prime minister and the rest of Europe can see "it" at the Inland Revenue Web site
, where a new portal has opened for individuals and businesses who want to file tax forms online.
The portal, launched in 2000 in partnership with outsourcing giant EDS, is in the vanguard for transforming how Inland Revenue does business. All tax services will be available electronically by 2005. For now, the national agency has converted two functions into Web-based applications. The first is for the self-assessment taxpayer population, which includes the self-employed and high-income taxpayers with complex returns.
Self-assessment affects about 8 million taxpayers in the United Kingdom, according to Glassberg, who explained that nearly 70 percent of the population never files an annual tax return, because their taxes are handled through withholdings with their employers. The more recent application accepts Pay As You Earn (PAYE) forms from business taxpayers.
In the United States, the Internal Revenue Service only accepts returns from tax preparation firms and professionals, such as H&R Block, and from dozens of software vendors. A handful of states, including the Commonwealth of Massachusetts, have set up Web-based applications like Inland Revenue that allow taxpayers to file returns directly over the Internet.
According to Glassberg, Inland Revenue doesn't want to be the sole supplier of tax filing services. "We don't care where the electronic message comes from, so long as we get a slug of XML code," he said. "It goes straight into our back-end systems."
But unlike the United States, the UK doesn't have a well-developed tax preparation industry. So, for now, Inland Revenue is the main source for filing online.
EDS, which has been running Inland Revenue's computers since 1994, developed the self-assessment application in three phases that included an overhaul of existing databases, networking the application with regional tax offices and embedding risk assessment and compliance engines into the electronic forms.
The front-end, taxpayer application was developed by EzGov, an e-government software firm based in Atlanta, Ga. Working on a tight schedule, EzGov and EDS developed the application in just 13 weeks using software made up of components that identify and authenticate users to ensure system security, translate the paper-based forms into Web-based-forms, validate user-information, make calculations, integrate existing data with the new online applications and provide communications with the UK Government Gateway.
The Gateway, which was built by EDS, receives, validates and processes the files from Inland Revenue's front-end filing application and integrates them with data from the back-end mainframe computers.
Inland Revenue ran into some problems with the self-assessment application during its first year of operation. "We struggled, but nonetheless got it up and running and improved it last year," explained Glassberg. The lessons learned from that experience gave the agency the knowledge to build the PAYE business application correctly. "We stepped away from the notion that what we knew best, the customer wanted," he said.
Starting with an incubator involving people from large and small business firms, Inland Revenue found out what the firms wanted in an online service and created a requirement that the government agency should administer corporate tax returns over the Internet. The result is a personalized portal for companies, where they can register, see their tax status with the department and conduct a number of transactions involving forms and payments.
Cleaner, Accurate Data
Glassberg said the application's benefits are threefold: simpler, quicker and cheaper. For example, onscreen validation means simple math errors are caught and corrected before the form is filed. The system masks other types of complexity that typically appear on a paper form. And for those who use the service, refunds are mailed out as quickly as three days after filing.
For Inland Revenue, the new service means it gets cleaner, more accurate data. Eventually, the department will benefit from some cost savings as it sheds manual processes that are no longer necessary. How much is unclear, because it's not known how many staff will be diverted into other areas, such as customer service, or will become redundant. The agency is working with the British trade unions to sort out that eventuality in a cordial manner. Currently, Inland Revenue provides live customer service until 10 p.m. seven days a week.
But one of the agency's transformation goals is to gather data about its Web-based tax content and improve the quality of customer service. This can be done by tracking the type of queries that come through e-mail, according to Glassberg, and then looping that knowledge back into the content that appears in the form of advice on the Web site.
Hopefully, the 80 percent of users who have basic queries will find the answers online, because Inland Revenue, like the IRS, is strapped for cash, according to Glassberg. "You have to make calls on what level of personal support you are willing to provide. You've got to have a holistic approach to customer service," he added. "You can't just offer round-the-clock operator service. Our call centers are open late, but then we look to the Web to provide answers to the questions they have."
Boosting the Numbers
In 2002, just 80,000 taxpayers used Inland Revenue's Web-based services, well below what was originally projected. The numbers for this year are looking better, though it's still early in the tax season for the United Kingdom to judge just how much better. "We're beginning to see quite an encouraging gradient of take-up," said Glassberg. "But we recognize we're still only hitting the early adopters."
To boost those numbers, Inland Revenue is planning to spend large sums on marketing, advertising and promotion. At the same time, the agency is putting enormous effort into fine-tuning the service so it works right every time a new user logs and files.
But Glassberg is a realist about the new world of computerized tax services. Getting it right the first time is wishful thinking, whether it's the technology or the marketing to bring users to the service, or attracting third-party vendors to offer their own versions of the software. So, Inland Revenue has adopted what it calls the "build and learn" method of application development.
"You have to go into these projects saying, you'll get it wrong, badly wrong in the early days," Glassberg explained. "The only way to learn in the Internet space is to build in bite-sized chunks, growing the application incrementally and learning from your customers."
Surely, Lady Godiva and King Charles would have approved.