Department’s permanent secretary Jon Thompson discusses the challenges and achievements of the department’s reform programme

Credit: Louise Haywood-Schiefer

Despite some setbacks along the way, HM Revenue and Customs remains determined to press on with its Making Tax Digital reform programme, with the department’s permanent secretary Jon Thompson claiming that “there is incredible demand out there to do this”.

The 2015 Spending Review committed HMRC to a four-year, £1.3bn transformation programme, marked by two large-scale projects –  the Building Our Future office rationalisation scheme and the Making Tax Digital project to create digital tax accounts for small businesses and individuals.

The digitisation scheme will see individuals and businesses get a personalised digital tax account, but its rollout has been delayed following what the department called “a number of concerns about the pace and scale of change”.

Businesses will not now be mandated to use the Making Tax Digital for Business system until April 2019 and then it will only be to meet their VAT obligations, compared to an original rollout across business taxation intended to start with income tax in 2018 and then VAT and corporation tax in consecutive years. But Thompson insisted that the fundamentals of the scheme remain sound in the effort to reduce the amount of tax lost through avoidable error.

Related content

• HMRC kicks off Making Tax Digital pilot​
• Digital chief lifts lid on how HMRC pulled off the biggest tax change in 70 years without anyone noticing
• Peers grill HMRC’s Making Tax Digital team over software development plans

“We have gone from launching it in 2016 to 18 million people opening either a personal tax account or a business tax account,” he said. “There is incredible demand out there to do this.”

Thompson added that accounting software products, which were being produced in line with the original timescales, will mean that there will be more firms signed up, initially on a voluntary basis, for the other taxes.

“Ministers have announced that some aspects of Making Tax Digital for Business are going to go on a slightly different timescale,” he said. “So, while mandation is only going to be for VAT, you can do the others and the software will be out there, and I think we’ll get a significant take up.”

As well as its own reforms, HMRC has also been involved in working on several policy landmarks – a new website for childcare entitlements and a critical role in the development of Universal Credit, the biggest welfare reform in generations. It has also had to take customer services for tax credits in house, following failures from outsourcing firm Concentrix in 2016. And all this is without counting HMRC’s principal task of collecting the tax that pays for the rest of government – and, indeed, before mentioning Brexit.

As a result of the ongoing challenges of extricating the UK from the European Union, some projects that might have been started now will not be taken forward, while some will take longer than they otherwise would have done. 

“We think that will probably create enough headroom to accommodate the number of projects that are needed for Brexit and the Autumn Budget,” Thompson said.
However, the perm sec insisted that the department will remain focused on the reason the reform plan was agreed in the first place. 

He said: “Some of the great programmes that we’ve started, like Making Tax Digital, will continue on. There are some aspects of it though that we might not be able to do everything we might otherwise have done, but the general thrust will continue,” he says. “And we should not lose [sight of] the fact that programmes were required for all the right reasons, in terms of changing the tax system, and changing the organisation.”

Jon Thompson was talking to PublicTechnology sister publication Civil Service World. Read the full interview with the HMRC leader here.