Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Accepted
Inefficiencies in the VAT system cause unnecessary delays and increased costs for taxpayers.
Conclusion
We received written evidence from VAT Solutions which specialises in providing VAT advice and regularly interacts with HMRC on behalf of its clients. VAT Solutions gave examples of how inefficiencies in the VAT system resulted in unnecessary delay and increased costs to taxpayers, including increasing the fees taxpayers pay agents. We asked HMRC to respond to the examples provided by VAT Solutions.16 In written evidence provided after our evidence session, HMRC expressed a willingness to engage with VAT Solutions on the specific cases to which it had referred. HMRC also acknowledged that a system issue had caused VAT returns and payments to become “stuck” in the system in December 2024, and told us it has now resolved the issue, including the removal of interest and penalty charges.17 11 Q 11; C&AG’s Report, paras 2.10, 2.12 12 C&AG’s Report, para 2.5 13 Office for Budget Responsibility, Economic and fiscal outlook, CP 1169, October 2024, para 3.58 14 Qq 16, 17 15 Q 26 16 CTS0003 17 Correspondence from HMRC, 19 March 2025 10
Government Response Summary
The government agrees and will publish HMRC’s Transformation Roadmap by Summer 2025, outlining plans to simplify tax administration and reduce customer burden. HMRC is also assessing the feasibility of updating its Standard Cost Model to measure taxpayer costs.
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.