Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
HMRC seeks to minimise business tax compliance costs through integrating digital software and programmes.
Conclusion
We asked HMRC why the cost to business of administering the tax system was so high. HMRC said that complying with tax obligations is an inevitable feature of doing business, and its aim was to make that cost as low as possible whilst making sure businesses comply. It told us accounting and business software offers real opportunities to reduce the cost to businesses of managing tax compliance by making it “part and parcel” of what they do every day to run their business. HMRC said it had largely done that for Pay As You Earn Income Tax and, more recently, for VAT through its Making Tax Digital programme.15
Government Response Summary
The government agrees with the Committee's underlying concern about the cost to business and commits to publishing HMRC’s Transformation Roadmap in summer 2025. This roadmap will outline plans to simplify tax administration and reduce the time customers spend on tax affairs through better digital services.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2025 1.2 The government has committed to simplifying the tax system and taking this forward 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). 1.3 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. 1.4 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. 1.5 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.