Recommendation 1

HM Government Accepted

The government agrees with the Committee’s recommendation. as part of its three strategic priorities for HMRC (improving day-to-day performance and the overall customer experience, closing the tax gap, and reform and modernisation). In summer 2025, the government will publish HMRC’s Transformation Roadmap which will bring together HMRC’s strategic and transformation ambitions into a single, public document. The roadmap will set out how HMRC plans to transform and simplify the way it administers tax and customs to reduce the time customers spend managing their affairs through better digital services, simplifying tax rules and improving education and guidance. The Roadmap will include the metrics HMRC will use to report progress. HMRC already publishes the cost for HMRC to collect each £1 of tax, within its Annual Report and Accounts, which has been stable at around half a penny since 2017-18. HMRC publishes estimates of any significant change in administrative burden on businesses arising from changes in tax policy in Tax Information and Impact Notes. The estimates draw on insights and data from a range of sources, including evidence in HMRC’s Standard Cost Model (SCM), which contains data on the costs of existing obligations. HMRC is assessing the feasibility of updating the SCM to produce a publishable estimate of business taxpayers’ costs and is also considering measurement of administrative burdens on individual taxpayers. billion compared to £34 billion in the previous financial year. This exceeded the annual target of £40.5 billion and was higher than pre-pandemic levels of compliance yield performance. Pre-pandemic productivity in 2019-20 was impacted by two specific very large cases, which resulted in an uplift to performance. HMRC are on track to achieve the 2024-25 end of year compliance yield target of £45.4 billion, a further improvement in performance and productivity. Final figures for 2024- 25 will be released within the Annual Report and Accounts. 3.4 HMRC set stretching annual compliance yield targets in accordance with a methodology agreed by HMRC, HM Treasury and the Office for Budget Responsibility (OBR). 3.5 As announced at Autumn Budget 2024 and Spring Statement 2025, HMRC will recruit an additional 5,500 compliance staff by March 2030. This investment, alongside other measures to close the tax gap (such as investing in modernising systems, delivering policy reforms and tackling tax debt) will deliver £7.5 billion of additional tax revenue per year by 2029-30. 3.6 This commitment alongside investing in improvements in HMRC’s systems risking capabilities is expected to increase productivity over the Spending Review 2025 period. 3.7 The average rate of return of compliance activity to yield is just one factor HMRC considers when deciding how best to deploy its resources. HMRC will aim to increase productivity, while optimising deployment across compliance priorities.