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Digital disaster

The ATO's digital outages have caused mass disruption to SMEs and resulted in serious productivity and financial losses. Is there an end in sight, and what can accountants do to mitigate their own risks?

Digital disaster
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A disruptive past

The Tax Agent Portal, while a godsend for some when it’s up and running, has proven to be as crippling as it is helpful.

Its maintenance downtime, both scheduled and unscheduled, has become somewhat of a joke in the industry, and accountants have come to factor in outages to their regular workflow.

Since its release, this has been the case, and the industry has lost faith in the promise of a stable service.

A quick Twitter search will show hundreds of questions, complaints and outbursts directed towards the ATO on a regular basis.

The most recent disruptions plaguing the ATO’s digital systems began in December last year, when a storage hardware meltdown caused unprecedented and widespread failure of the ATO’s online systems.

The significant downtime, and deteriorated functioning of critical services including the Tax Agent Portal, BAS Portal and Business Portal, spread right into the early months of 2017, causing significant productivity losses for accountants in small businesses in particular.

Commissioner of Taxation, Chris Jordan, labelled the saga as the “worst unplanned system outage in recent memory”.

“This was an extremely unusual and unfortunate event, with the outage caused by a significant and unprecedented failure of storage hardware. The storage hardware was upgraded in November 2015 by Hewlett Packard Enterprise (HPE) after a lengthy and thorough selection process, and was seen to be ‘state-of-the-art’ at the time,” said Mr Jordan at the time of the initial crash.

“We understand the use of this storage hardware is not unique to the ATO and is basically the same used by other large clients of HPE in Australia and across the globe.

“What compounded the problem beyond the initial failure was the subsequent failure of our backup arrangements to work as planned. The failure of our backup arrangements meant that restoration and resumption of data and services has been very complex and time-consuming.”

The ATO’s update over this period were also inconsistent with functionality reports from the accounting community, which added to the saga.

For example, on December 15, the ATO announced that the Tax Agent Portal, BAS Portal and Business Portal were back online.

However, several tax agents got in touch with Public Accountant to say this was not the case.

In particular, “partial system outages” and “degraded performance” messages were encountered throughout the day on services such as activity statements, on-demand reports, pre-fill data, client accounts and mail messaging.

The client communication list service on the portal also experienced a “major outage”.

Even before this latest major crash, the ATO admitted its failings on the tech development front, and recognised the significant impact this has on the accounting profession.

In fact, addressing IPA members, ATO assistant commissioner Venetia Blackman said the Tax Office got it wrong with the development of myGov by not working closely or effectively enough with tax agents.

This resulted, for one, in many tax agents being kept out of the loop in relation to the correspondence that the ATO was sending their clients via myGov.

Ms Blackman suggested the ATO has learnt from this experience and will work closely with the professional community when it rolls out services that affect clients moving forward.

She also acknowledged that the Tax Agent Portal in particular is prone to crashes and is often down for maintenance - and promised that new systems are in the works, and a priority for the ATO.

An end in sight?

At time of writing, the ATO is beta-testing an online system that will replicate the current Tax Agent Portal.

“We have done quite a bit of work to try and stabilise the portal, but it is aged infrastructure. At the time it was released it was the ‘you beaut’ thing. That’s a long time ago. Unfortunately we find ourselves in a place where we haven’t maintained that platform to keep it contemporary,” Ms Blackman told IPA members.

“We can keep putting Band-Aids on it … or give you a brand-new one that is capable of a whole new experience,” she said.

The new service was originally supposed to be made available to the accounting community in the first half of 2017, but at time of writing, it has not been released and in fact, has been delayed, due to the severe stretch of digital downtime at the ATO.

“One of the unfortunate aspect of the outages is that all IT projects under development to improve tax practitioner services are on hold and maintaining stability of the current systems is priority one two and three,” said the IPA’s Tony Greco.

Mr Jordan said while the ATO remains committed to delivering its new services, he cannot, at time of writing, give a clear delivery date.

“We… made good progress working with the profession to develop and test new online services for 2017. However, and as you would appreciate, these further developments are on hold until we have stabilised the performance of our systems for Tax Time 2017 to match the service and experience of last year,” Mr Jordan said.

“So we have only partly delivered our commitments... We did fix the major irritants with the portal and replaced the Correspondence list with the Client Communication List; we progressed implementation of the Practitioner Lodgment Service with software providers, albeit with relatively slow take-up; but we are yet to provide the enhanced online functionality.

“I commit to you that we will be delivering on these enhancements, however today I cannot give a confirmed delivery date until we have finished the re-plan of our IT work program.”

When the new service is up and running, Public Accountant understands there will be no forced migration to the new service from the current tax agent portal.

Although the new service is long overdue and overall welcome from the accounting community and its representative bodies, the accounting community is particularly sceptical of the ATO’s commitment to a time frame and to providing a stable service.

Crying wolf

The biggest source of frustration from the accountants who had to deal with this latest service outage was not so much the digital downtime itself - although that was obviously diabolically frustrating - but mainly the inaccurate updates that accountants were receiving about when systems would be up and running, and to what degree they would be functional.

Gail Freeman, director at Gail Freeman and Co, said at the time the outages meant she had work that outright could not be completed by deadline.

Ms Freeman, who was quick to sing the praises of the Tax Agent Portal when it is fully functional,  said losing access to the portal means that, importantly, it’s difficult for her to verify data when completing work for clients.

However, like many accountants, Ms Freeman would prefer to have a clear indication of the downtime from the ATO, rather than promises that a solution is in sight.

“Then at least I can work around it and plan. Accountants tend to want to get things done sequentially; it would help if I could organise around the downtime,” she said.

Several other tax agents, who have chosen to remain anonymous, confirmed to Public Accountant that the inconsistent messaging is what is particularly problematic for smaller firms.

“I will get to the office early if the systems are all ready to go, and often I do,” said one.

“But when you run there thinking the systems are working, and they are not, it is beyond unreasonable and frustrating,” he said.

Demanding compensation

The IPA has been, very publicly, pushing government agencies to realise the impact of digital instabilities, and floating the idea of compensation for affected parties.

Mr Greco said, ideally, financial compensation for earnings lost during the outages would be the solution.

“If you continually are suffering losses because of someone else’s poor service delivery, I think you start to say 'Well, when is enough, enough?'

“Do they deserve something? I think rightly so, but the difficulty is how do you quantify on a per practice basis the quantum of compensation. We understand that that's the dilemma,” Mr Greco said.

However, while affected accountants are certainly deserving of compensation, Mr Greco acknowledged the complexities in administering and assessing it.

“Some members are heavily compliance-based and they would be massively impacted because effectively they can't do their work, so in that sense these outages have prohibited them from being able to continue on generating revenue,” Mr Greco adds.

“It's case by case but it would be hard to find a practice that wasn't impacted in one way or another, even advisory firms have been caught out not being able to do certain things, so it has had widespread impacts.”

Ms Freeman said, uncategorically, she has suffered significant losses as a result of the outages.

“It's impacted on our earnings because when you're a small practice, there is a significant impact,” Ms Freeman said.

What can you do?

The IPA, as always, encourages members to get in touch where they are experiencing further and significant problems.

Accountants are also encouraged to voice their concerns with the ATO directly. More than ever, the ATO is open to community feedback, particularly from professionals.

The Tax and BAS Agent Portal help centre, portalhelp.ato.gov.au/tap/ta/, has resources to assist with portal support. This page also links to the technical support, https://www.ato.gov.au/General/Online-services/Technical-support/, for portal troubleshooting advice. The ATO says this should be a tax professional’s first point of assistance.

On the practice side, while the ATO’s systems being down will always be a roadblock, there are some systems and software procedures accountants can put in place to mitigate the risk of being totally off the air.

Cloud-based software systems in particular, which are not linked to office hardware or servers, are valuable back-up options for client data. Typically, data is backed up in real time, and can be accessed on various infrastructure platforms - ie, you are not restricted to one office, one computer, one device.

Although this is not a perfect solution where the ATO’s portal data is necessary, it does mean that recent and relevant data remains accessible, and work doesn’t need to come to a screeching halt.

Although the use of cloud technology has been on the up in the accounting sector, in general, attitudes and conversions to new technology has not been particularly positive.

For example, software provider Class, despite its recent strong growth, cites the slow transition of accountants to the cloud as a limiting factor to its business.

“Accountants are always busy, they have their head down, doing what they did last year. Finding time to embrace change, finding time to look at new systems and put new things in place, is hard for them to do,” said Class chief executive Kevin Bungard.

Citing research from Investment Trends, Mr Bungard said accountants’ intentions to migrate to cloud have been steadily increasing since 2013, while actual migration has been slow.

“What that means for us is that unless something dramatic happens, unless there’s some sort of legislative requirement or some other trigger, we think it’s going to take quite a number of years for accountants to move across to the cloud,” he said.

In the meantime, the commissioner promises an end in sight. Is there actually? Unfortunately, as always with the Tax Agent Portal, it’s a case of watch this space.

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