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Public Accounts Committee questions feasibility of HMRC’s digital plans

After the departure of HM Revenue and Customs IT chief Mark Dearnley, the PAC is concerned about the robustness of the department’s digital transformation plans

The Public Accounts Committee (PAC) is worried that HM Revenue and Customs (HMRC) will not be able to successfully manage plans to digitise the tax system and replace its £600m-a-year Aspire contract.

In its annual review of HMRC’s performance, the PAC said the department faced challenges around spending cuts, replacing Aspire and restructuring.

One reason for concern is that the HMRC’s chief digital and information officer, Mark Dearnley, returned to the private sector in September 2016. The PAC has previously emphasised that stable leadership is key to the success of complex IT programmes. The report added: “Losing further key staff would damage HMRC’s capability to deliver transformation and manage the risks when its IT contract ends.”

Dearnley’s departure has already thrown HMRC’s ability to replace Aspire successfully into question.

In March 2016, HMRC said it had agreed a phased Aspire contract exit plan with Capgemini and Fujitsu, with some services running until 2020 – three years beyond the planned 2017 exit, as previously reported.

Earlier this year, HMRC began offering online tax accounts for individuals and businesses in its drive to become “one of the most digitally advanced tax administrations in the world”. 

As part of the move to digital, HMRC cut staff numbers in its personal tax department from 26,000 to 15,000 between 2010/11 and 2014/15. But then the personal tax service collapsed and the department had to recruit more than 2,000 new staff to deal with this.

The PAC said it was still worried that HMRC could end up repeating the mistakes of the past.

“Our examination of HMRC’s performance has identified a number of matters of concern, some of which we have raised before,” the PAC said.

“HMRC is relying on new digital services to transform its business and reduce demand on its call centres. Making a success of this is vital to safeguarding tax revenues and ensuring an acceptable level of customer service.”

It pointed out that HMRC was “staking a great deal on the success of its plans” of going digital, but still lacked an “adequate plan” should things not go as expected.

Fall-back plan lacking

PAC chair Meg Hillier said the committee was concerned about a lack of a “convincing fall-back plan”.

“HMRC’s senior management cannot afford to be complacent about the catastrophic collapse in customer service in 2014/15 and the first half of 2015/16, nor about what is at stake should their projections about demand for call centres prove wrong,” said Hillier.

“Contingency planning should not be an optional extra. By the spring, we will expect to see evidence that HMRC has agreed measures with the Treasury to ensure it is not left playing catch-up at taxpayers’ expense.”

The PAC report added: “HMRC faces an enormous challenge to maintain services, while delivering spending cuts, restructuring its business, replacing the Aspire contract (through which it has procured almost all its IT), at the same time as relocating almost all its staff and dealing with the implications of Brexit.”

HMRC received £1.3bn as part of the government’s 2015 spending review towards digitising the tax system.

Although the roll-out of digital tax accounts for businesses is not due to be fully completed until 2020, HMRC is beginning private beta testing with a small group of customers this month.

HMRC is also offering people help in getting online through call centres, web chats, webinars, instant messaging and the trusted helper service. .....................................................................................

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