Select committee: Public Accounts Committee
Conclusion 6
23rd Report - The cost of the tax system
Published 30 Apr 2025
Addressed to HM Treasury
Public Accounts Committee The cost of the tax system All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
We are concerned that HMRC is not well–placed to take advantage of the opportunities offered by technology, for example the development of artificial intelligence (AI) and e–invoicing. AI has the potential to improve the productivity and speed of HMRC services. But, as we have reported recently, achieving large–scale benefits from AI will require government departments to not only adopt new technology but also put in place the right foundations, including skills, infrastructure and the high–quality data on which AI depends. HMRC recognises that its ongoing use of legacy systems will constrain its exploitation of AI as they limit the accessibility and quality of data. Legacy systems also make HMRC more vulnerable to the use of AI by bad actors. HMRC has not provided some digital services that have been available to taxpayers in many of the world’s larger economies. HMRC has been slower than some tax authorities in adopting pre–population of tax returns and, along with others in government, has been slower at driving the adoption of e–invoicing, although the government began a consultation on e–invoicing in February 2025. recommendation HMRC should write to the Committee alongside its Treasury Minute response, with an assessment of how well–placed it is to take advantage of new technology including AI, and its plans and timetable for addressing the factors that constrain its capability and capacity to do so. 7 1 The cost of administering the tax system and trust in HMRC Introduction
From: Public Accounts Committee, 23rd Report - The cost of the tax system (HC 645), 30 April 2025
Government response
The government responded to the whole report on 18 September 2025.
Summary written by Accountability Index from the government's response. It is not the government's own words.The government states that it "agrees with the Committee's recommendation" on each of the report's recommendations, and reports that several are already implemented while others carry target dates.
- On simplification, the government will publish HMRC's Transformation Roadmap in summer 2025, which "will include the metrics HMRC will use to report progress".
- On trust, the government agrees with both recommendations and describes them as "Recommendation implemented", citing annual customer surveys, complaints data and focus groups.
- On compliance productivity, it says HMRC "will recruit an additional 5,500 compliance staff by March 2030", alongside other measures to close the tax gap.
- On legacy IT, HMRC "will write to the Committee" on its remediation plans, forecast cost and expected savings, with a target implementation date of September 2025.