MPs claim department faces ‘difficult decisions’ to deliver on schemes including Making Tax Digital rollout and office relocations 

MPs on the Public Accounts Committee have warned that HM Revenue and Customs faces a major challenge to implement its wide-ranging transformation plans, including the controversial office hubs programme, at the same time as the tax agency has to implement new customs and tax systems ahead of Brexit.

In a review looking at HMRC’s annual report, the committee highlighted that HMRC is undertaking 15 major transformation programmes. These include high-profile plans to shut around 170 regional offices and replace them with 13 regional hubs, as well as the Making Tax Digital programme to move more taxation transactions online and working to close the tax gap of unclaimed revenue.

Agency chief executive Jon Thompson told the committee that it is undertaking a full review of its reform plans to reassess how many of its proposed changes could be completed alongside Brexit, and said that a “full reprioritisation” was under way. “We plan to do that in quarter four, which is between Christmas and the end of the financial year, and give that back to ministers because I do not believe it possible to take 250 existing programmes of change and simply add Brexit on. I think you reach the point of organisational capacity and capability.”

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However, committee chair Meg Hillier said its transformation programme would have been less risky had it not attempted to do everything at the same time.

“What was already a precarious high-wire act is now being battered by the winds of Brexit, with potentially catastrophic consequences,” she said. “HMRC accepts something has to give and it now faces difficult decisions on how best to use its limited resources – decisions that must give full consideration to the needs of all taxpayers.”

The extent of the “serious, pressing challenges” faced by HMRC require swift and coordinated action in government the report said. “As a matter of urgency the authority must set out a coherent plan and demonstrate it is fit for the future,” Hillier added.

The committee concluded that the transformation programme was not deliverable as planned due to unrealistic assumptions and increased pressure from the additional workload caused by Brexit. These include projections for reduced customer demand due to moving tax enquiries which have not been meet, meaning HMRC failed to achieve expected sustainable efficiency savings in the first year of its transformation programme.

Responding to the report, an HMRC spokesperson confirmed that it is reviewing all its transformation projects to ensure that we are focusing our efforts where they will have the most impact for the UK and customers. “As we explained to the Public Accounts Committee, we expect take our proposals to ministers shortly.”