HMRC: We've got £1.3bn for digital tax schemes. Tell us how to spend it

Um, would some kind of app be useful here?

Man exasperated after being on hold for a long period of time. Photo by Shutterstock
Pic: Shutterstock

HMRC is casting around for ideas on how to splash £1.3bn in order to become the most "digitally advanced" tax administration in the world.

Last year the body was awarded £1.3bn of digital investment over the next four years, which it said would yield £1bn in extra tax revenue after 2020 by ending "bureaucratic form-filling".

Today the body has issued six consultation documents "each focusing on specific customer groups or specific elements of the Making Tax Digital reforms".

The reforms are supposed to "remove the burden" for businesses of the annual tax return. Part of it will include an app for the self-employed that will process pictures of their invoices, and issue quarterly prompts to update digital tax accounts.

It is hoped that HMRC's current "digitisation" savings will offset £717m per year in cuts, including a headcount reduction of 21 per cent by financial year 2019-20.

However, the National Audit Office recently warned that HMRC has previously been too hasty in cutting staff before the expected cost savings of a shift to digital have materialised.

Edward Troup, executive chairman of HMRC, said the reforms will bring the tax system into the 21st century: "Going digital will abolish the annual tax return as we know it by 2020, replacing it with a personalised digital service through which taxpayers will be able to send and receive information to HMRC at the click of a button.

"There is still a lot to design and develop, and it’s important that we do this hand-in-hand with our customers and their representatives; these consultations are the next step in this process."

Jane Ellison, financial secretary to the Treasury, said: "By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first."

Arguably, HMRC's far more pressing concern is how it will migrate from its £10bn contract with Capgemini, responsible for processing £500bn in tax revenue each year.

The Infrastructure and Projects Authority last year labelled that project as being at 'high risk of failure'.

HMRC IT chief Mark Dearnley, who is responsible for the migration, recently said he was stepping down from his £185,000 role after his three-year contract ends in September.

The Making Tax Digital documents include: Bringing Business Tax Into the Digital Age; Simplifying Tax for Unincorporated Businesses; Simplified Cash Basis for Unincorporated Property Businesses; Voluntary Pay As You Go; Tax Administration; and Transforming the tax system through the better use of information.

The consultation period will run until November 7 2016. ®

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