Select Committee · Public Accounts Committee

The cost of the tax system

Status: Closed Opened: 15 Jan 2025 Closed: 17 Jul 2025 4 recommendations 35 conclusions 1 report

HM Revenue and Customs’ (HMRC) stated aim is to run the tax system in the simplest, most customer-focused and efficient way. In 2020, the Government published its 10-year strategy to build a trusted, modern tax administration system. The long-term goal is to create a system which prevents non-compliance, and allows both businesses and individuals to …

Clear

Reports

1 report
Title HC No. Published Items Response
23rd Report - The cost of the tax system HC 645 30 Apr 2025 39 Responded

Recommendations & Conclusions

6 items
19 Conclusion 23rd Report - The cost of the tax system Not Addressed

HMRC lacks sufficient analysis on upstream and downstream compliance costs.

HMRC explained that its strategy is to promote good compliance and prevent non–compliance (collectively known as ‘upstream’ compliance), and this is “bearing fruit,” with upstream yield increasing to about a third of all yield in 2023–24. HMRC considers that upstream compliance is less costly than ‘downstream’ work (carried out in …

Government response. The government claims the recommendation is implemented but does not address the committee's observation that HMRC lacks sufficient analysis of costs and marginal returns between upstream and downstream compliance work, instead providing updates on compliance yield and staff recruitment.
HM Treasury
31 Conclusion 23rd Report - The cost of the tax system

HMRC acknowledges security concerns with third-party Making Tax Digital software, setting strict specifications.

We asked HMRC whether there were potential security concerns that could be posed by the third–party MTD software taxpayers use to submit their tax returns, including whether there were risks to HMRC’s own systems.63 In written evidence provided after our evidence session, HMRC told us it takes security very seriously. …

HM Treasury
38 Conclusion 23rd Report - The cost of the tax system

HMRC demonstrates limited use of technology in promoting e-invoicing

The written evidence received from Dr Edidiong Offiong Bassey also suggests that HMRC is not making the best use of technology. In particular, he indicated there has been limited promotion in the UK of electronic invoicing and electronic fiscal devices which have seen 71 CTS0001 72 Q 48 73 Q …

HM Treasury
39 Conclusion 23rd Report - The cost of the tax system Not Addressed

HMRC's e-invoicing consultation explores information reporting requirements for businesses

We asked HMRC about its joint consultation with the Department for Business & Trade on e–invoicing which it launched in February 2025. HMRC said e–invoicing has the potential to help businesses and build tax compliance into the way they run their business. We asked what was being covered in the …

Government response. The government's response focuses entirely on HMRC's use of AI and its initiatives in this area, without addressing the committee's observation or implicit query about e-invoicing.
HM Treasury

Oral evidence sessions

1 session
Date Witnesses
6 Mar 2025 Justin Holliday · HMRC, Lucy Pink · HMRC, Sir Jim Harra KCB · HMRC View ↗

Correspondence

3 letters
DateDirectionTitle
15 Sep 2025 To cttee Letter from the Chief Executive and First Permanent Secretary of HM Revenue and…
4 Sep 2025 To cttee Letter from the Chief Executive and First Permanent Secretary of HM Revenue and…
27 Mar 2025 To cttee Letter from the Chief Executive and First Permanent Secretary for HM Revenue an…