Source · Select Committees · Public Accounts Committee
Recommendation 29
29
Accepted
Making Tax Digital imposes significant burdens and costs, risking further system complications for taxpayers.
Conclusion
The previous Public Accounts Committee found in 2023 that rather than reducing the overall burden on customers as HMRC had initially expected, MTD was imposing significant additional burdens and costs at a time when many of its customers could least afford it. The Committee concluded that HMRC had lost sight of the need to put taxpayers at the heart of changes to the tax system and there was a risk that planned changes would add further 51 Q 54 52 Q 74 53 Committee of Public Accounts, Progress with Making Tax Digital, Eighteenth Report of Session 2022–23, HC 1333, 24 November 2023, p 3–4 54 C&AG’s Report, para 3.15 55 Comptroller and Auditor General, Progress with Making Tax Digital, Session 2022–23, HC 1319, National Audit Office, June 2023, para 2.14 56 C&AG’s Report, para 3.16 57 Q 64 17 complications rather than simplify the system.58 Since then the government has confirmed that MTD will be extended to Income Tax Self Assessment for many sole traders and landlords.59
Government Response Summary
The government states the observation is implemented, outlining its current practices for conducting customer research, using customer insights in service design, assessing changes against 'Customer Guardrails,' and publishing customer impact assessments in Tax Information and Impact Notes (TIINs).
Government Response
Accepted
HM Government
Accepted
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 HMRC conducts regular research with customers to understand their needs and perspectives. HMRC’s Government Social Researchers conduct qualitative and quantitative research, including nationally representative surveys, with thousands of customers each year. In 2024-25, HMRC delivered 18 commissioned and 15 in-house social research projects. Additionally, user research is a core activity of HMRC’s digital programmes. In 2024-25 HMRC conducted user research with 1,835 participants. Findings were used to inform design decisions on products and services. 5.3 HMRC currently uses customer and user insight as part of its end-to-end change lifecycle for designing new services or making changes to existing ones. This is a critical aspect of design to ensure the department builds solutions that address customer needs and a foundation for evaluating the impact of the service to identify areas of improvement or new opportunities for innovation. 5.4 As part of its business case process, HMRC assesses formal change against Customer Guardrails, a framework for ensuring customer needs are thoroughly considered. Evidence of identified customer needs, including assessment of impacts on customer costs and benefits, is then recorded through completion of an External Customer Impact Assessment document. This forms part of the documentation required by HMRC governance boards. 5.5 Customer impacts are published in the ‘Summary of Impacts’ section of Tax Information and Impact Notes (TIINs). Where a measure or policy change is driven by customer need, this can be set out in the ‘Background to measure’ or ‘Policy objective’ sections of a TIIN as appropriate.