Digital chief lifts lid on how HMRC pulled off the biggest tax change in 70 years without anyone noticing

Interim CDIO Mike Potter also discusses how the department is leading the way on mobile apps and blockchain, and why he wants a tax service built around life events

Over the summer, HM Revenue and Customs implemented what it claims might represent the biggest change to the UK income tax system for 70 years. If it works as intended, it will result in hundreds of thousands of citizens no longer paying too much or too little.

But, if you somehow missed this landmark development, then the man who oversaw it couldn’t be happier.

“There was a profound revelation in tax that nobody noticed; how fantastic is that?” says Mike Potter, HMRC’s chief digital and information officer.

The department’s new “dynamic coding” system uses the “real-time information” on employee pay that companies have been required to provide HMRC since 2012 – as well as data gained from individuals updating their own Personal Tax Account – to update people’s pay-as-you-earn (PAYE) tax codes contemporaneously, rather than at the end of the fiscal year.

The most powerful thing for me was when we finally got over four stars in the App Store

Speaking at a techUK event in London, Potter says: “We will now avoid the 300,000 people who get into debt because they reach the end of the year and owe us money – or we owe them money. And the thing I am most proud of is that nobody noticed – because nothing went wrong.”

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He adds: “It is probably the biggest change to PAYE since [it was introduced] in the 1940s. It shows that government can pull off [projects like this].”

The introduction of dynamic coding is just one strand of an overdue metamorphosis of the UK’s tax-administration agency, says Potter.

“We implemented self-assessment in the mid-90s, and I do not think a lot happened after that – it is time we transformed the experience,” he adds.

Part of the transformation is making details of the department’s application programming interface (API) software-building tools available to third-parties. Such openness, Potter explains, is helping HMRC lead the way in cross-Whitehall data-sharing. The more efficiently this is done, the less often citizens will need to interact with the government – and the more seamless it will be when they do so, he claims.

“We can expose information and share it across government. That is going to be the most powerful catalyst for change in government in the next 10 years,” the CDIO says. “Today, if you tell us you have a child, we can tell the [appropriate] records office. When you set up a business, we tell Companies House.”

Potter adds: “We have a target of a tax service which is based on life events – the moments in citizens’ life that dictate the need to interact with government.”

HMRC is also embracing mobility, and has an app which has already handled 38,000 tax credits renewals. 

“We expect that to grow exponentially,” Potter says. “The most powerful thing for me was when we finally got over four stars in the App Store!”

Embracing emerging
The app already enables users to log in using the fingerprint scanner on their phone, and HMRC will not hesitate to embrace further biometric technologies as and when applicable, according to Potter. 

“When Apple crack the voice side, then we will adopt that as well,” he says. “We tend not to be the first adopters. But, when something has [achieved] scale and we can see that users want to use it, we want to be able to adopt it quickly.”

Blockchain is another emerging technology in which the department is determined to lead the way, the digital head honcho claims. To which end it has already worked on a test case for how the technology could help various government agencies work together in their operations on the UK border.

“We have created a proof-of-concept built on blockchain that demonstrates how the 20 organisations that operate at the border can coordinate, so things are only done once – but done well,” Potter says.

The interim CDIO will continue this work in his new role as HMRC’s director for future borders, which he commences next month. Former Microsoft executive Jacky Wright is to take over as the department’s full-time CDIO on 16 October. 

Alongside the evolution of its services, HMRC is also undertaking a major overhaul of its internal IT systems and supplier relationships. This includes ditching the 13-year £10bn Aspire agreement with outsourcing giant Capgemini.  

“We have a ferociously complex IT landscape that we are in the process of transforming,” Potter says.

“Aspire is dead – it died on the 30 of June. What we have now is a series of [relationships]. Yes, we have retained relationships with people like Accenture and Capgemini, but what matters [for any supplier] is whether you bring innovation, and whether you can work in a partnership. UK Cloud has been a great exemplar of that – they are an SME working with us in a very different way.”

Which is just another reason why Potter (pictured right) believes that the department itself can now be seen in a very different way.

Or as he puts it: “Who would have thought that HMRC would be acting as a digital disruptor?”


Sam Trendall

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