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HMRC makes cloud and data progress

HMRC has shifted half of its systems to virtualised servers, and is nearing completion of a major core system roll out and boosting data capability to support its digital ambitions

HM Revenue and Customs (HMRC) has ramped up its efforts around cloud computing and data as part of its overall ambition of becoming “one of the most digitally advanced tax administrations in the world”.

In its annual report and accounts for the year ended 31 March 2019, HMRC stated technology is at the core of its decision-making processes, and that its digital and IT capability and skills have been reorganised and strengthened.

Highlights of the plan listed in the report include continued progress around cloud, with 66% of the department’s systems moved onto virtualised servers so far.

Latest work included the migration of more than 99 million accounts from the National Insurance and PAYE service away from physical datacentres. HMRC has also moved 18 legacy services that receive 50 million submissions per year to the new environment.

The introduction of a key HMRC system, the new Customs Declaration Service (CDS), is another key point of the report. The electronic service for managing custom declarations processes replaces Customs Handling Import and Export Freight (Chief), which is nearly 25 years old.

Traders rely on system development and testing work from intermediaries to migrate their customers to CDS. According to HMRC, CDS and Chief will run concurrently for a period of time to ensure the integrity of the customs platform and ensure the safe migration of traders.

HMRC reported that it has worked with suppliers and trade bodies to support development work for the service, and provided most functions the CDS needs to support imports. The department is now in the final stages of the roll out of the new system.

According to the tax authority, the decision to replace Chief had been made before the EU referendum. However, the introduction of CDS is timely as the new system can scale to cope with any potential increases in the volume of declarations resulting from Brexit.

Data progress

HMRC also reported it has been further enhancing the technology used to analyse the enormous amounts of data it holds, the main goals being analysing risks and identifying patterns to enhance revenue collection ability.

Fraud and error loss are estimated to cost the UK government £31bn to £49bn yearly. A consultation was launched in July to identify how data-driven technologies can help address the problem.

However, HMRC stated that it is mindful of the need to ensure data is managed, protected and exploited appropriately, and noted that it is working towards agreeing and delivering its data strategy.

According to the department, achievements of the new Data Governance Board so far include the introduction of “foundational” elements, such as a data audit on its high-risk systems and services to identify risks of non-compliance with the General Data Protection Regulation (GDPR), whereby asset owners are informed about the risks around non-compliance and take responsibility for managing them.

HMRC’s Voice ID service is an example where a specific risk of non-compliance has been identified as the department collected data with consent from five million UK taxpayers. An enforcement notice to delete the unlawfully collected data was then issued in May 2019 by Information Commissioner’s Office (ICO).

The ICO’s instruction was to delete the data within 28 days. According to HMRC, the process was about 40% of the way through when the enforcement notice was issued and the deletion was completed one week before the deadline of 6 June 2019.

In addition, the tax authority highlighted its use of robotic process automation, with 78 robotic automations conducting 15.7 million of its transactions during the year covered in the report.

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