Source · Select Committees · Public Accounts Committee
Recommendation 4
4
Accepted
HMRC's legacy IT systems are outdated, increasing costs and taxpayer burden.
Conclusion
HMRC allowed many of its IT systems for administering tax and interacting with customers to become out of date, increasing both its costs and the burdens on taxpayers. In 2020, HMRC recognised its IT systems for administering tax were a significant risk to operations, due to the postponement of maintenance and systems upgrades to secure cost savings. Spending Review 2020 enabled HMRC to spend more on its IT estate but progress in remediation is costing more and taking HMRC longer than expected, with some funding being reallocated to other 5 priorities in 2023–24. HMRC considers that the three key risks that arise from operating legacy systems to be lower levels of security, lower reliability and resilience, and higher costs of system changes. HMRC is now tracking progress on remediation and says it has a plan to remediate remaining legacy systems, but the speed of execution depends on HMRC’s spending review settlement for 2026–27 to 2028–29, which is due to be finalised by June 2025. Last year HMRC acknowledged that it is behind many other organisations in enabling customers to communicate securely through digital channels. It told us that in 2023–24 about 69% of all its interactions with customers were digital. Too much of its communication with customers continues to be by post which can be inconvenient and costly and can discourage customers from using its digital services. Improving its digital systems, and supporting more customers to use them, would help HMRC reduce calls to its helplines, two–thirds of which it estimates are avoidable, as the customer could have carried out the transaction, or found out the information, by using digital services. recommendation a. Within three months of the spending review being published, HMRC should write to the Committee setting out its timetable for remediating its legacy IT systems, the forecast cost of investments and expected savings. It should then report its progress and spending on remediation in its annual reports.
Government Response Summary
The government has written to the Committee, as requested, and will publish a Transformation Roadmap this summer. HMRC also committed to procuring an enterprise Customer Relationship Management (eCRM) platform by the end of 2025-26 and adopting a Contact Centre as a Service (CCaaS) approach to modernize its systems.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented HMRC has written to the Committee alongside this Treasury Minute response. HMRC is changing how it interacts with customers, delivering a more streamlined, efficient tax system by increasing the use of digital channels allowing customers to self-serve, making it quicker and easier to meet their obligations and reducing the instances where customers need to call or write to HMRC. HMRC is building in mobile messaging updates to customers at varying points in their HMRC journeys to provide them with reassurance, manage their expectations and reduce progress chasing calls. HMRC will publish a Transformation Roadmap this summer, bringing together HMRC’s strategic and transformation ambitions into a single, public document. The government is focused on modernising HMRC to become a digital-first organisation, having committed to reduce the volume of paper post sent whilst maintaining this provision for critical correspondence and the digitally excluded. By the end of 2025-26, HMRC will procure an enterprise Customer Relationship Management (eCRM) platform, providing advisers with a complete picture of customers’ tax affairs, transforming how HMRC interacts with customers. The platform will support the government's aim for HMRC to modernise its systems, improve customer service, and close the tax gap. HMRC will also adopt a Contact Centre as a Service approach (CCaaS). A new omnichannel software solution that connects all customer service channels (like phone, email, webchat, voice recognition, social media) into a single, unified system to provide a better and more consistent customer and advisor experience. eCRM and CCaS will work interconnectedly.