Recommendation 8

Delivering the programme for Self Assessment is much more complex than for VAT. There are an estimated 11 million Self Assessment tax records that will need to be quality checked and moved to HMRC’s new system, 7.8 million more than for VAT.17 The calculation of an income tax liability has more components than VAT, and can include reliefs and adjustments on an annual basis. HMRC launched a pilot in April 2017 to enable developers to test and develop software. It forecast that 15,500 business taxpayers would join the pilot by 2021–22 but struggled to secure eligible participants. HMRC told us it had increased the pilot for Self Assessment participant numbers to 137 in 2023. We therefore asked HMRC what had happened with the pilot and why it had resulted in so few participants. It acknowledged numbers were low, but said early stages were for technical development and to test all elements of the customer journey.18 We received written evidence from the Institute of Charted Accountants in England and Wales (ICAEW) which noted that up to April 2022, almost all the focus of HMRC’s programme team was on VAT.19 We also received written evidence from Cirrostratus Exedra Ltd that said the Self Assessment testing functionality was not workable, and did not allow developers to test their products fully worked with HMRC’s new system.20 We asked HMRC how it felt it was progressing with digital change compared to its international counterparts. HMRC told us that while it is content with the services it provided compared to other international tax authorities, it had concerns about the speed at which it implemented change. HMRC acknowledged that it must speed up its implementation of digital services in order to keep up with international developments.21 12 Qq28–29 13 Qq 17, 30, C&AG’s Report para, 2.25, Figure 3 14 Q 51 15 Qq 24, 30, 31 16 Q 30 17 Q 22; C&AG’s Report, para 1.15 18 Qq 22, 40, 43 C&AG’s Report, paras 13, 2.19 – 2.20 19 PTD0007, Written evidence submitted by the Inst