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Infrastructure and Major Projects Authority gives HMRC single customer account red rating
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HMRC single customer account project rated at risk

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The viability of HMRC’s £205m Single Customer Account software initiative was called into question in the government technology watchdog’s latest annual report.

3rd Aug 2022
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The Infrastructure and Projects Authority (IPA) annual report 2022 reviewed the progress of more than 270 projects ranging from military initiatives and construction (schools, nuclear power stations, HS2) right through to 31 technology projects estimated to be worth £37bn.

HMRC is responsible for a portfolio of 29 major projects, amounting to £14.2bn in estimated lifetime costs and was singled out by the report authors for its “well-developed” centralised approach to governing project investments, resources and delivery priorities. Four of HMRC’s projects were rated green, 12 amber and three were red.

In some instances, the IPA’s assessments disagree with HMRC’s, including the much vaunted Single Customer Account (SCA) project.

Seen as a game changer

Described in an Office of Tax Simplification evaluation note as the “heart of the government’s 10-year strategy for tax and the keystone which will lock all the other pieces in place”, the SCA will make it easier for taxpayers to view and manage their tax affairs and benefits administered by HMRC.

The tax department explained further that technology was at the heart the SCA programme, but is not the primary driver. “It is about creating seamless online end-to-end journeys for customers to manage their tax affairs online in a single place," HMRC said. 

AccountingWEB contributor Paul Aplin said the hub would connect numerous sources of information and predicted it would “turn out to be the real game changer in transforming UK tax compliance”.

In the annual accounts for the year to 5 April 2022, HMRC said it was “well on the way to delivering single customer accounts, which will transform the experience of many millions of taxpayers within the next few years by enabling them to view and manage all their tax affairs in one place online”.

Progress was being made to deliver the SCA using a unique customer record (UCR) to filter data received from taxpayers and third parties, the department said into the online account.

During the past year, HMRC said it had decided the SCA’s technical architecture, but gave the project an amber “risk to delivery” rating due to risks arising from resource constraints on the UCR element of the project and potential cost. 

Red alert

The IPA assessment published four months later was less confident, estimating the lifetime costs of the SCA project at £129m and giving it a red rating to reflect its view that “successful delivery of the project appears to be unachievable.”

The published IPA report offered only a limited commentary that “given the vast customer base HMRC administers, complete coverage of all customer segments and tax regimes will take time and a phased approach”.

A companion government major projects portfolio spreadsheet included a little more detail, explaining that the red project status was “mainly due to a lack of clarity regarding the scope of the programme, and a significant lack of expert resource”. 

The lack of detail and discrepancies with HMRC figures raises some doubts about the IPA analysis. For example, where the watchdog estimates the lifetime costs at £129m, the OTS evaluation noted that £205m was committed to the project last year. 

In response to queries about the assessment, HMRC pointed out that the assessment was a “snapshot” of current issues in February. “The red status was primarily due to a lack of clarity on the programme objectives and the need for specialist agile digital delivery leadership,” HMRC said.

“We’ve taken this seriously and have made changes to pivot the programme to delivery and back to green. Regular health checks will be conducted to provide ongoing assurance.” The department also acted moved quickly to bring in expert resource, which has resulted in a best practice “product” mindset, HMRC said. Digital transformation and agile digital delivery expert Dan Woodrow joined the department as SCA programme delivery director and digital transformation director Joanna Rowand was appointed as the project’s new senior responsible officer.

At the recent Xerocon event in London, Rowland alluded to the SCA project and some of its challenges when answering a question from an accountant in the audience. Work was still needed to join up digital identification within the department, she explained

“Agents are a fundamental part of the tax system. We want to get to the point that agents can see what their clients see. We want digital ID to make things seamless. GDS [Government Digital Service] has made progress on the individual side, but is still in the design phase for businesses and agents,” she said.

It was good to hear a bit of straight talking from a responsible HMRC official and we will watch to see if Rowland and Woodrow can restore momentum to the SCA during the current financial year.

Infrastructure issues

There were two other red project ratings in the government’s assessment of HMRC’s IT project portfolio – both of them significant elements of the department’s 10-year transformation strategy.

A key part of that strategy has been to migrate away from mainframe data centres and to transfer processing to mainly cloud systems. Operating under the acronym SOTF (Securing our technical future) the programme had to extend its existing data centre contracts by 12 months until December 2023 and has so far migrated 298 of 542 separate services to the new infrastructure – a completion rate of 55%.

According to the SCA: “Associated enablement and decommissioning work are more complex, expensive and time-consuming than previously thought. This has resulted in a Q4 delivery RAG status of red.” Since the report was published, HMRC confirmed a Computer Weekly report that the authority had changed the red rating to amber in May.

Another major HMRC project rated as amber was Making Tax Digital – moving up the viability charts from an amber/red rating two years ago. While a new programme director appointed in May 2021 has taken the lead with MTD, the project assessors commented: “The scale of the income tax self assessment (ITSA) delivery is challenging due to its complexity, size and scope. The complexity of some VAT customer records and IT system migration challenges have resulted in penalty reform for VAT moving to January 2023.”

Article updated at 4pm Wednesday 3 August to accommodate HMRC responses. Additional reporting from Xerocon by Jake Smith.

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Replies (8)

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By HarryB
03rd Aug 2022 14:04

Re MTD - surely, given the advertised implementation dates, it should be a bright green at this stage, not being the subject of an argument about whether its amber/borderline red!!

And looks like we will all get a new number - a Unique Customer Record (UCR). So we will have unique NI numbers, Unique Taxpayer References, a new UCR, a government gateway sign on, with a different sign on for agents, a different sign on for in year CGT, a different Trust registration system, a Personal Tax Account, and now a Single Customer Account (SCA). Then there's VAT, ATED, PAYE, etc etc

Something tells me that the SCA won't be all its cracked up to be.

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By MCV71
03rd Aug 2022 14:53

MTD has only moved from red/amber to amber in two years?! Anyone who says it is happening in 2024 needs to go on the standup comedy circuit.

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By Hugo Fair
03rd Aug 2022 22:48

"explaining that the red project status was “mainly due to a lack of clarity regarding the scope of the programme, and a significant lack of expert resource” ... so how come (using those same criteria) MTD ITSA isn't brilliant vermilion?

It may have a new name (and therefore no sense of its past history of project failures), but SCA and in particular UCR are not the first attempt - and will not be the last.

And please do something memorable (and probably painful) to the next HMRC spokesperson who indicates that 'agile' will solve all their problems. It's really more like saying that the solution to a dearth of goals (for football fans) will be solved by continuously changing the goalposts' location.

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By johnjenkins
04th Aug 2022 09:38

Agent Strategy was supposed to sort all this stuff out. I was so enthusiastic when it was first brought to our attention. Then what happened? Downhill all the way. The real disappointment is that nothing HMRC come out with now will work. Government also need to realise not everyone can or needs to be high tech savvy.

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By Carol Jefferis
04th Aug 2022 11:43

'A key part of that strategy has been to migrate away from mainframe data centres and to transfer processing to mainly cloud systems. Operating under the acronym SOTF (Securing our technical future) the programme had to extend its existing data centre contracts by 12 months until December 2023 and has so far migrated 298 of 542 separate services to the new infrastructure – a completion rate of 55%.'
Ermm - Mainly cloud systems - and where do they think these cloud systems are located exactly?
Are they actually in clouds?
Or could they possibly be in data centres? As in actual physical buildings, sitting on the ground, hopefully somewhere secure, possibly in the UK even. Because let's face it cloud systems are just applications being hosted remotely and no amount of magical thinking will put them on actual clouds, or at least not yet.

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Replying to Carol Jefferis:
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By Hugo Fair
04th Aug 2022 11:58

".. no amount of magical thinking will put them on actual clouds, or at least not yet" - except in cuckoo-land.

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Morph
By kevinringer
04th Aug 2022 12:25

There is a gulf between HMRC rhetoric and reality. Take the SCA. 30/60-day CGT was only launched 2 years ago yet it doesn't interact with SA. If the SCA is to work then surely all new systems should be integrated.

As for MTD still at amber. The MTD ITSA pilot started in 2017 when Theresa Middleton announced the expectation that 400,000 taxpayers would sign up. 5 years later and the number was a mere 8. It took HMRC 5 years to reach a mere 0.002% of its target. With such dreadful progress after 5 years, and that the vast majority of taxpayers have never heard of it, there is no way MTD ITSA will be ready by 2024. How can that be an amber?

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By rmillaree
04th Aug 2022 17:17

"Another major HMRC project rated as amber was Making Tax Digital – moving up the viability charts from an amber/red rating two years ago. While a new programme director appointed in May 2021 has taken the lead with MTD, the project assessors commented: “The scale of the income tax self assessment (ITSA) delivery is challenging due to its complexity, size and scope. The complexity of some VAT customer records and IT system migration challenges have resulted in penalty reform for VAT moving to January 2023.”"

Well that serves thejm right all this new fangled stuff that they cant even get to work as well as the old system that did work - and vat returns only ever have the 9 boxes - god knows what the mtd for tax issues are going to be - they cant even collected fracking direct debit payments correctly under mtd -- shambles plus summit nice to see them admit the truth somewhat

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