Wise is paying its customers' tax bills. That should be a rule, not a kindness

A spreadsheet cannot sign a tax return

Only a person can. Under Britain’s self-assessment system, the individual who files owns every figure on the form — including the figures they had no means of producing and no realistic means of checking.

That is the uncomfortable thing underneath the news that Wise, the money transfer and investments app, has gone to HM Revenue and Customs after technical errors in third-party software led thousands of its customers to pay the wrong amount of tax on their investments. Wise says it will cover the resulting bills. That is the right call and an expensive one. But the reason it reads as generosity rather than compliance is precisely the problem: very little obliged the firm to do it.

What the taxpayer actually controls

If you hold investments outside a tax-free wrapper, you have to tell the tax authority what they earned and pay accordingly. Almost nobody reconstructs those numbers from first principles. They take the annual statement the platform sends them and copy it across. They cannot do otherwise: the raw trade records, the pricing data, the currency conversions and the fund-level information all live with the provider.

So the number is manufactured upstream and the legal exposure lands downstream. If the figure was too low, tax was underpaid, and interest runs from the original due date whether or not the taxpayer was blameless — interest is compensation for money held late, not a punishment, and it is not waived simply because someone else made the mistake. There may also be an inaccuracy penalty, defensible on the grounds that reasonable care was taken, but that is a defence you have to run, individually, after the fact, usually with an accountant’s help that nobody reimburses.

Multiply that by thousands of people and you have a large quantity of unpaid administrative labour created by a single upstream failure.

Delegation is not transfer

The detail that the fault lay in third-party software should change nothing, and in financial regulation generally it does not. A firm can contract out a function; it cannot contract out responsibility for the function. That principle is what stops a bank blaming its cloud provider for an outage, and it is why operational resilience rules reach into supply chains rather than stopping at the firm’s own perimeter.

Tax reporting to customers sits in an awkward place. It is not investment advice. It is not a payment service. It is a data product, produced by a regulated-adjacent firm, that determines a legal obligation owed to the state by somebody else. The accountability logic ought to apply whether or not the particular output falls neatly inside a regulated activity, because the consequence of getting it wrong is a legal demand against a consumer.

The ones who overpaid

“Wrong amount” cuts both ways, and only one direction generates a letter. Underpayment is self-advertising: the tax authority eventually notices and asks. Overpayment is silent. Nobody chases you to give money back, and the window for amending a return and reclaiming is finite.

So the honest test of how seriously a firm takes a reporting failure is not whether it settles the demands landing on customers’ doormats. It is whether it identifies the customers who quietly paid too much and gets them their money, including those who have since closed their accounts. That number should be published alongside the other one.

The case against this

The strongest objection is that self-assessment means what it says. Responsibility is personal by design, and the system works because people check. Let taxpayers route liability to whoever supplied their figures and you weaken the incentive to look at the figures at all. There is a second objection: the tax authority already has discretion to drop penalties where reasonable care was taken, so a formal mechanism adds process to a problem that case-by-case judgement handles. And a third: the market just worked. The firm found the error, reported it, and is paying. Why legislate for a problem that reputational pressure solved in a week?

The answers, in order. Personal responsibility is coherent for figures a person can verify; it is theatre for a fund valuation computed inside someone else’s system. Discretion over penalties does not touch interest, does not cover the cost of amending, and requires every affected individual to make the same argument separately — which is exactly the kind of repeated, identical adjudication that a standing process exists to prevent. And market discipline is a function of brand value. It protects the customers of firms with something to lose, on the day the story is in the press. It does nothing for the customer of a provider that has gone quiet, or gone under, or whose error only emerges after three filing seasons.

A rule is useful precisely in the cases where the firm would rather not pay. Wise’s response is the easy case, which is what makes it a good moment to write the rule.

The thing to watch

What is still missing from the public record is scope: which tax years, which products, how many customers, how many in each direction, and whether the correction reaches people who have left. Those are the facts that decide whether this was a contained glitch or a multi-year reporting defect, and they are facts only the firm and the tax authority hold.