However, this isn’t simply a case of creating an online portal for people to interact with HMRC. This project requires the tax authority to simplify its systems and integrate the data it holds across a number of silos. Equally, it will see the department shift from interacting with most people over a very short timeframe (when annual tax returns are filed), to frequent interaction.
Whilst this project is necessary and if successful will simplify tax for a large number of people - what is HMRC doing to ensure that it isn’t yet another government IT disaster?
As we know, Whitehall doesn’t have the best track record when it comes to rolling out innovative systems that change the way that a department or organisation interacts with the public. The National Programme for IT? Universal Credit? The recent rural payments debacle? The list is endless.
Details are still thin on the ground, but there are a number of warning signs already.
David Gauke MP and Financial Secretary to the Treasury said this week that by 2020, HMRC will have moved to a fully digital tax system where:
• bureaucratic form-filling is eradicated — taxpayers should never have to tell HMRC information it already knows;
• unnecessary time delays are eliminated — the tax system operates much more closely to ‘real time’, keeping everyone up to date and removing the risk of missed deadlines, unnecessary penalties, debts arising and errors in the system being carried forward from one year to the next; and
• taxpayers have access to digital accounts — with the information HMRC needs automatically uploaded, bringing an end to the tax return.
In every walk of life, people are embracing the digital revolution. From banking online to doing their food shopping, from making a GP appointment to booking a cinema ticket, from advertising a business to paying invoices, millions of individuals and businesses are benefiting from the convenience and simplicity of digital services.
But businesses and service providers are going further than simple digital interaction with their customers — they are harnessing the opportunities of the digital age to transform the fundamentals of how their businesses work and how they provide their services. And their customers are reaping the benefits.
This Government is bringing the digital revolution to Whitehall – ensuring that the services it provides are similarly transformed. The tax system is no exception. During this Parliament, HMRC will make fundamental changes to the way the tax system works — transforming tax administration so it is more effective, more efficient and easier for taxpayers.
HMRC outlined how it is joining up its internal systems and it will populate the digital accounts with the information it holds, removing the need for users to collate information from a bunch of different places and inform the department about details it already holds (albet in silos). This means that when taxpayers log on to their digital account, web forms should already largely be populated with the details HMRC has.
The department also says that it will be analysing this information closely to identify those that are looking to bend or break the rules.
By 2020, HMRC believes that most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update the authority at least quarterly via their digital tax account.
HMRC will provide free software and apps for businesses to record the information regularly, which will then link to the department’s systems.
Equally, the future tax system for individual taxpayers will be built on the same core principles as those for business - a digital tax system operating as close to real time as possible. By 2020, HMRC aims to be interacting digitally with all taxpayers.
Before I go into why I think HMRC needs to be cautious with this project, it’s worth noting that this is long overdue and if successful will be of great benefit to people up and down the country. Anyone that has had to do their tax return knows how complicated it can be, mostly because of the ridiculously confusing online systems that it currently requires you to navigate.
Equally, I do think HMRC has better digital capabilities than some of its Whitehall peers. I’ve seen evidence of the department making progress towards becoming a far more agile, digital operation than it was previously.
That being said - there are some warning signs that I think need to be highlighted.
Firstly, the budget for this is huge. Although costing less than the plagued Universal Credit programme
(approx £2bn) - the numbers are still pretty high. I’m sure HMRC has spec’d this properly, but when you’re talking about £1.3 billion, there’s a lot at stake.
If anything goes wrong, that’s a lot of taxpayer money. The government hasn’t got a strong track record of delivering against budgets of that size.
Equally, I get nervous when such a distinct timeline is presented. HMRC has broken down comprehensively a number of targets over the next four years of what it would like to achieve. Of course targets are a good thing, but I think we can expect these to move somewhat. When does the government ever deliver on time?
I also think such a distinct timeline doesn’t allow for lessons learned or moving goalposts. As we saw with Universal Credit, certain elements were far more complicated than originally anticipated and by the time a working product was created, it was understood that a different approach to the logic and design was needed. Effectively DWP had to start again.
Digital development should focus on minimum viable products, user testing, feedback and iteration. Planning for outcomes when you don’t know what they’re going to be doesn’t make a great deal of sense to me. Have an end goal in mind, but don’t set yourself up for failure.
Finally, HMRC has a stack of legacy problems that it is currently wrangling with. It’s multi-year, multi-billion outsourcing contract Aspire needs to be dismantled and this poses a “significant risk” to the department, according to the National Audit Office.
Digital is great, but legacy can’t just be forgotten about. What are HMRC’s plans for Aspire and how is it going to manage this transition? I’m not so clear on those details.
Fantastic promise. Completely necessary. Execution will be key.
Let’s hope we aren’t referring to this as the latest digital disaster in 2020.