Financial secretary to the Treasury David Gauke has been in post since 2010 and during that time he has nailed his colours to the mast of HMRC’s digital strategy.
So much so that this week he hosted a software conference to set out the department’s open application development strategy to encourage a new generation of third party programmers to link into HMRC’s systems. As part of a series of media interviews this week, he talked with AccountingWEB for 10 minutes on Thursday about the latest developments.
Given HMRC’s chequered track record when it comes to technology projects, it’s quite a surprise to see a senior politician taking such a close interest in the nuts and bolts of tax data processing, and Gauke has been doing so since he previewed early prototypes of the personal tax dashboard in 2011.
“I don’t bring technical expertise on my own behalf, but it struck me quite early on doing this job that the tax system really does need to move in to the 21st century. In an environment where 16m people have online bank accounts, the case for online tax accounts is very strong," he said.
When he first took up his position five years ago, the personal tax account was in the early planning phase. “Now we’re starting to see it move quite rapidly,” he said, pointing out that 3m individuals and businesses now have online tax accounts. There are other real benefits in making the tax process easier - particularly for small business, where it’s quite time-consuming.
“If people have the ability to do [their taxes] on their laptop or smartphone, then we can make the whole interaction with the tax system much easier. It won’t be enjoyable, but we can make it less painful. If the tax system is easy to comply with, more people will comply and more money will come in.”
Monday’s software meeting was mainly a rallying call to encourage software developers to pick up and run with the data HMRC will be making available. Admitting that HMRC did not have a monopoly on innovation and wisdom, Gauke said that 75% of all transactions submitted to HMRC were done with private sector software. By moving further in this direction, the API initiative was all about “improving customer service, ensuring choice, and making use of the creativity and expertise within the software industry”, he said.
But the path between software concepts and successful IT project delivery is treacherous. For all his encouraging words, Gauke risks tarnishing his reputation by being so publicly identified with a project that could very easily go wrong. So far, even the continuing niggles over the integrity of real time PAYE information have not dented his confidence.
“I think that there will always be an issue with whatever system that you have. But a more transparent tax system does lend itself to higher quality data. The problems emerge more quickly,” he said.
The length of time available for this interview saved the minister from having to delve further into the nuts and bolts of HMRC’s idiosyncratic systems. To support his top level view, he frequently cited facts and figures previously offered up by his HMRC officials. More often than not these tended to promote an upbeat perspective on the department’s digital innovation that is at odds with the experiences of AccountingWEB members who have to use them.
One of the most frustrating aspects of the HMRC digital strategy is how consistently it has marginalised tax agents, most recently when the department announced a new corporation tax system that would not be available for tax advisers. When pressed on this point, the minister replied: “Agents continue to be an important part of the operation of tax system; 70% of small businesses use agents to complete their returns.”
The minister echoed recent comments from HMRC’s Jim Hanna that the small business sector is a particular concern because it represents a significant portion of the tax gap. “Wanting to ensure that agents are part of the process is important... and a lot of work is going on in terms of products for agents,” he said.
Some of those services will emerge shortly when the agent online self serve (AOSS) project is opened up for public testing, he added. “Over the months and years ahead, the reality is there will be more there for agents.”
Agents have made it clear they want access to client data and “HMRC is aware of that,” he continued. “It’s slightly harder to deliver that, but it’s all part of HMRC plans to ensure that it can be done.”
Gauke talks a good game on the HMRC digital strategy and the general view within the profession is that it is better off with someone in his position who has a basic grasp of tax law and mechanics. But on this showing his grasp of software development principles might be of more concern. Just as with the law itself, each incremental tweak to improve the system adds yet more complexity.
Open program interfaces are very trendy at the moment, but they insert yet another layer into a software infrastructure of around 50 separate core systems - and around 600 external applications. Wave after wave of previous grand schemes from self assessment itself, to iXBRL, the national insurance platform (NPS) and RTI for PAYE have created this software labyrinth.
New programming teams have been set up within the department to take on the work as HMRC reorganises the IT tasks currently undertaken by the Aspire consortium, which means that the department will be wrestling with two more significant risk factors affecting the successful delivery of the minister’s vision for tax.
If Gauke hasn’t previously reviewed the NAO reports and government project reviews on HMRC’s technology projects, he might be well advised to start doing so. With so much at stake in terms of tax revenue and public confidence, even his robust political reputation may struggle to recover if the digital strategy goes awry over the next few years.
For further insights on his thinking, have a look at this short video clip, one of several Gauke recorded with our BusinessZone.co.uk colleagues last week:
AccountingWEB looks forward to keeping in touch with the minister and his team as the digital tax account project evolves. If you have further comments or queries about HMRC’s digital strategy, post them below and we will do our best to get them answered.
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AccountingWEB’s Editor at large has been with the site since 1999, rising from news editor to editor in chief, global editor and head of insight. As a roving editor, he continues to investigate the profession's use of technology around the world. He devotes his spare time to technology history and an oddball collection of stringed instruments...