The Fizz! Blog

Take care!

From the start of April, a new system comes into force to determine the size of the penalty payable if you make an inaccurate tax return and pay too little tax.

Up until now, this has been a bit of a grey area.  Carelessness would generally attract no penalty at all. Obviously, you'd have to pay the tax that was due - these penalties are *in addition* to the tax payable - and interest as the tax had been paid late, but nothing else.  On the other hand, systematic dishonesty could attract a penalty of up to 100% of the tax due - and criminal prosecution in some cases, of course.  But all this was at the discretion of the Revenue and varied from tax officer to tax officer and from tax office to tax office.

Now, the penalties are being set down in law, and carelessness may be more costly.  If you fail to take, in the words of the new rules, "reasonable care" and consequently make a mistake on your tax return, the basic penalty will be 30%.  However, this will be reduced if you notify the Revenue of the underpayment.  If you do this "out of blue" because you've noticed the error, the penalty can be waived entirely.  If you do it because the Revenue has noticed that something's wrong - although they're not sure exactly what - then it can be reduced to 15%.

At the top end, for dishonesty, 100% remains the "baseline" penalty, though it can be reduced if the taxpayer either confesses, or is helpful once he has been found out.

The good news is that, if you use an accountant, and they make a mistake, you should be OK - as long as a) you've appointed an adviser who you could reasonably expect to be competent and b) you gave them all the information they needed to get the return right.  If that's the case, the carelessness will be accepted as theirs, not yours, and should not result in a tax penalty.

There's lots of coverage of this change within the profession at the moment.  It's also being suggested that accountants should make their clients aware of the change, to deter them from either dishonesty or carelessness in future.  Personally, I would hope that accountants already make it clear to their clients that making dishonest tax returns is not a great idea!  But I will make sure our clients know that carelessness or incomplete disclosure of information may result in harsher penalties in future.

www.fizzhq.com

Project management gone very, very wrong

One of my passions in life is the Edinburgh Fringe Festival.  You may be aware that last year’s festival was hit by massive ticketing problems –new software commissioned by the Fringe to sell tickets at counters, by phone and online pretty much imploded almost as soon as it went live.  If you were there at any point, you couldn’t possibly have remained unaware of the chaos caused.

Yesterday, an independent report into the fiasco, commissioned by the Fringe, was released.  It essentially amounts to a checklist of all the mistakes you can make when running a project.  Here are some of the key issues that it highlights:

• The type of package chosen was based upon dogma, not a real business case.  The Fringe decision-makers were insistent that new, bespoke software had to be created just for them.  They were convinced that their requirements were so special that “off the shelf” software – even modified for their purposes – was not good enough.  It appears that this was based on an obsession with innovation, not a reasoned, costed approach.  As a result, a proposal from an established supplier of ticketing software was rejected, despite being far cheaper than the bespoke proposals.   I’ve often seen this happen in smaller organisations.  They will create special software, either by commissioning it externally or by a director or employee spending time on it.  And all the while something off-the-shelf probably could have done the job fine.  We all like to think our businesses are unique, but often they do have things in common with others.

• The final shortlist of three suppliers included one whose sole business was ticketing software, one with extensive experience of ticketing software, and one with absolutely no experience of ticketing software whatsoever.  Guess which one was awarded the contract?

• One of the shortlisted suppliers was considered to be in good shape financially.  The other two were both assessed during the tendering process as having a “high risk of business failure” – that’s literally what was formally documented.   Guess which category the winning supplier fell into?  This had a real effect in the end, as towards the end of the development process it found itself unable to pay developers to whom it had subcontracted work – and they downed tools.

• Not enough time was allowed for the creation of the software.  The Fringe basically runs for August.  You’d think that work on any new ticketing system would begin in September, right?  No, the contract was signed at the start of March, giving 14 weeks before the system had to go live.  With a supplier who had no experience of ticketing software.  Lunacy.  It’s often the case that large organisations – particularly public sector or not-for-profit ones – can take a long while to make decisions.  That’s what happened here – the Fringe started the process internally after the 2007 Fringe, but meeting followed meeting followed meeting and the decision-making process took an age.  They must have known that would happen.  They should have either started the process earlier, to give a bigger window in the lead up to the 2008 festival, or deferred the implementation date until the run up to the 2009 festival.

• Through the planning stage, the Fringe sensibly retained an experienced project manager to run the process on behalf of the Fringe.  When the contract was awarded, they let the project manager go.  At that point, the management of the project became the sole responsibility of the software company, and the Fringe just had to trust them when they said the project was going well.  There was no single individual within the Fringe organisation with primary responsibility for making this project happen – despite that fact that it was easily the biggest threat to the smooth running of the 2008 Fringe.  That almost defies belief.

I could go on, because there’s plenty more where that came from!  If you’re interested in reading all 48 pages of the actual report, you can find it here.

www.fizzhq.com