Select committee: Public Accounts Committee
Conclusion 11
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 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
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.