HMRC’s ambitious transformation plans are facing delays as government officials scramble to get the UK ready for Brexit.
In a letter to the Public Accounts Committee Jon Thompson, HMRC’s chief executive, explained that Revenue officials are currently deciding on which projects to delay or stop altogether, as resources are redeployed to work on Brexit.
“Basically, Thompson is turning around and saying to the government, ‘we already have so many projects to deliver and now Brexit has been dumped on us’,” said Brian Palmer, tax policy adviser and Making Tax Digital (MTD) lead at the AAT. “He’s asking for more money, and he’s asking the government to be realistic.”
The forecast for MTD for VAT would appear murky. The multi-year project has a well-documented history of being beset by delays. Mandatory quarterly reporting was earmarked to start this month - April 2018 - but was delayed in 2017 until “at least 2020”.
But Palmer waved away any doubts about the long-term future of the project. “They’re still clear, as MTD is the big show in town they want to deliver on. One or two of the services around it that aren’t so mission critical might not come online as soon as was promised.
“MTD itself will go on. They’re waiting on the success of the pilot, get the green light from Mel Stride and then get on with the rollout. The core services will all come in on the timescale we’ve talked about. But secondary support services that would be nice to have may be longer in delivery.”
An HMRC spokesperson confirmed to AccountingWEB that there’s been no change to MTD’s delivery timeline. “MTD will be mandated for VAT for those businesses with income above the VAT threshold from April 2019, as planned. Preparations for MTD are progressing well, with pilots underway for both VAT and Income Tax,” they said.
But between MTD and resources being redirected to focus on the UK’s post-EU customs operation, it seems clear that delivery of HMRC’s 267 projects will be staggered. Thompson confirmed that the review of HMRC’s “transformation programme” that will decide which projects get delayed or scrapped has already happened.
“The review prioritised on the basis of seven criteria and included all 267 projects that were in flight, or planned by September 2017, including all envisaged Brexit programmes,” wrote Thompson. “We also took a very clear view on the capacity and capability of HMRC to deliver and the risks associated with a programme as large and complex as this.”
Thompson promised he would update the PAC as soon “as final decisions have been taken”.
“At this stage I can say that we have proposed a number of projects which should stop, or not start and a number which should be stretched out over a longer time scale. I hope that we can provide further transparency of the detail of this in due course.
“Our assessment is that if these changes are agreed then the resultant portfolio is deliverable, with appropriate level of risk. Also, that we have the capacity and capability to deliver it, or can obtain those capabilities in an appropriate timescale.”
According to Palmer, it’s a prudent move. “If they have an already ambitious order book of projects. It’s a really sensible approach to take such a review in light of what was always going to be a challenging workload.”