Recommendation 20

We asked HMRC why it omitted significant costs from the cost-benefit analysis it included in its May 2022 business case, and whether the decisions made on the basis of the business case would have been the same if this information had been included. HMRC said that it had made “a technical interpretation error in how to apply customer costs and 39 Qq 42, 45, 67–68, 71; PTD0007, Written evidence submitted by the Institute of Chartered Accountants England and Wales, 19 June 2023; C&AG’s Report, para 3.29 40 Q42 41 PTD0012, Written evidence submitted by Low Incomes Tax Reform Group, 19 June 2023 42 Q 66; PTD0013, Written evidence submitted by the Business Application Software Developers Association, 19 June 2023 43 Q 66 44 Qq 54–64 ; C&AG’s Report, paras 2, 15 45 C&AG’s Report, paras 3.12–13.18 16 Progress with Making Tax Digital transition costs in the business case”. HMRC told us that it had applied this to the financial case, whereas the NAO had highlighted to it that HM Treasury’s Green Book stated that these costs should have been reflected in the economic case for the programme. It said that while it did not carry the figure through to the right analytical tables in the business case, in accordance with the Green Book, it did estimate customer costs. It asserted that part of the confusion was due to the fact that one of the main drivers for the programme was the additional tax revenue that it would bring, and that it did not consider it to be possible to use the Green Book economic case to make decisions about the programme because the Green Book ignores additional tax revenues. Despite this, HMRC told us that it was confident that decisions about spending on the programme were correct throughout and took account of all the relevant information.46