Source · Select Committees · Public Accounts Committee
Recommendation 32
32
Accepted
Quality issues and excessive choice plague HMRC's Making Tax Digital software listings
Conclusion
HMRC told us that it accredits Making Tax Digital software products so that someone selecting that product knows it has been tested against HMRC systems and if they use it correctly it will successfully submit their information. It also provides information about the costs and the functionality within those product to help businesses decide which product to select.78 In answer to our questions around software authorisation and certification, HMRC told us that it currently listed over 500 software products for VAT and explained that whilst it tried to keep the list up to date, it relied on software companies to notify HMRC if software no longer met the programme’s requirements. HMRC expects the number of software products for VAT to reduce but could not tell us whether it plans to introduce further quality measures to ensure software meets its 72 Qq 49–50; PTD0014, Written evidence submitted by APARI Software Ltd, 19 June 2023 73 Q 63 74 PTD0013, Written evidence submitted by the Business Application Software Developers Association, 19 June 2023 75 PTD0007, Written evidence submitted by the Institute of Chartered Accountants England and Wales, 19 June 2023, PTD0014, Written evidence submitted by APARI Software Ltd, 19 June 2023 76 PTD0013, Written evidence submitted by the Business Application Software Developers Association, 19 June 2023 77 Q 63 78 Q73 22 Progress with Making Tax Digital accreditation standards.79 Many customers have said they feel overwhelmed when having to choose software from HMRC’s website for Making Tax Digital for VAT due to the amount available.80 There have been quality issues with some of the software listed on HMRC’s website. In its written evidence to us, Rossmartin Tax Consultancy Limited told us that one of its clients used listed software that allowed them to produce something completely incorrect, and another said their software choice had unexplained features that allowed double income reporting.81 Coachbuilt Cards Ltd also told us t
Government Response Summary
The government agrees with the conclusion, clarifying that HMRC operates a 'production approvals process' rather than accreditation for software, based on API specifications and testing. It states approved MTD for ITSA software will be listed on a Software Choices webpage and details existing processes for investigating errors, addressing customer impacts, and removing problematic software.
Government Response
Accepted
HM Government
Accepted
6.8 The government agrees with the Committee’s recommendation. Recommendation implemented 6.9 The government has provided a full response to the Committee in the following paragraphs. 6.10 Following the Committee’s June 2023 hearing, HMRC corrected oral evidence in a letter dated 29 June 2023, including confirmation that it does not accredit software. 6.11 Instead, HMRC operates a recognition or “production approvals process” to assure users that software meets its requirements. Approval depends on software meeting API specifications and undergoing testing. 6.12 Developers are also required to accept HMRC’s software terms of use, covering data security requirements, encryption policies, and data-access controls. 6.13 Before introducing MTD for ITSA, HMRC will list approved software which meets minimum functionality standards on a Software Choices webpage, helping customers to choose the most suitable product for them. 6.14 HMRC has a proven software integration model, which ensures commercial products meet with HMRC’s technical specifications and can integrate seamlessly with its systems. MTD for VAT has an ecosystem of over 500 commercially available products, catering to diverse customer needs and budgets. 6.15 Calculation of tax liabilities and the application of penalties remain a function of HMRC, using its own systems. However, HMRC has robust processes to protect taxpayers if, for example, they believe a software error has resulted in a penalty. This includes review and appeals processes. 6.16 HMRC would also investigate any such cases, ensuring any detrimental customer impacts are addressed. Should a major problem affect MTD software, HMRC can ultimately remove the ability of that product to upload updates to HMRC's systems, safeguarding customers and developers until problems are resolved.