IT head sets out digital tax priorities for HMRC

HMRC is focusing IT efforts on developing the Customs Declaration Service, Brexit transition and replacing the obsolete Government Gateway over the next two years, while the API development programme is at the heart of the rollout of Making Tax Digital. Sara White reports on HMRC's IT vision

Speaking at Iris World, the software developer’s annual customer conference, HRMC head of software development collaboration, Lee Hawksworth, set out the key priorities for the tax authority, emphasising Brexit and customs compliance as key issues but barely mentioned the future IT work plan for Making Tax Digital, reinforcing impressions that HMRC has a fully developed Making Tax Digital software interface set to roll out as soon as the government green lights the next stage of compliance.

The backbone of HMRC’s IT strategy is the development of the API [application programme interface] gateway which allows software developers to embed programming information into accounting software, for example, and allows for the long-term development of much more complex Making Tax Digital reporting environment.

Hawksworth said: ‘We want to be the most digitally advanced tax administration in the world and with the API gateway we have been able to increase the amount of tax revenue collected in 2017/18 to £605bn from £500bn in 2013/14, despite 40% staff cuts since the Revenue and customs merged.’

There are currently 1,000 plus IT specialists working for HMRC, employed across seven purpose-built centres around the country, handling two billion annual transactions through 13 different digital tax services. The IT department has grown from a digital team of just six people in 2012 when Hawksworth joined HMRC to set up the digital tax arm.

HMRC’s multi-channel digital tax platform is now migrating to the cloud with cybersecurity controlled through a cyber command structure.

Hawksworth said: ‘HMRC now has the biggest digital operation in government and we are looking to share our API strategy across government. This represents a significant change in IT approach which before was managed through the Aspire outsourced contract, which has been disbanded.

‘Under the current technology stack, there is a progressive movement to the cloud, so the systems are not held on premise.

‘The current API programme is almost at completion, offering third party integration.’

The current HMRC portfolio of delivery has three core objectives with major transformation programmes including the overhaul of the Government Gateway, the rollout of Making Tax Digital and work on the Customs Declaration Service (CDS).

‘The Customs Declaration Service is the biggest thing we are working on at HMRC and will revolutionise the way we do customs and excise in HMRC, replacing CHIEF [Customs Handling of Import & Export Freight system]. CDS is currently in private beta.

The Government Gateway is 16 to 17 years old and is not fit for the modern world. It uses a static ID and user password, which is not a good idea

‘The Government Gateway is 16 to 17 years old and is not fit for the modern world. It uses a static ID and user password, which is not a good idea now. How can anyone remember a long digit and number password. Going forward people using the Personal Tax Account will have to go through ID verification with two-factor authentication.’

There are currently 78 services on HMRC's API platform.

‘We are looking to refresh the API software, we cannot exist in a world where we are producing all the APIs without working very closely with software developers. It is all about partnership.’

The current tech stack, HMRC’s IT architecture, is based on a multi-channel digital platform, which is split into the enterprise tax management, individual taxes and a customs platform. This then feeds into an overarching case management system, which effectively can overview the three tranches of data and provide a complete picture about each taxpayer, whether they are a business or an individual.In the longer term HMRC’s future technology vision, Tech stack of the future, will see the replacement of existing legacy systems with tax compliance developments shaped by robotics, artificial intelligence and machine learning, delivered to customers through the cloud. At the core of the IT system will be APIs, apps and microservices, data platforms and cognitive services driven by bots.

HMRC investment in technology has four key aims – improve operations and enhance the services offered to taxpayers, automation of tasks to ‘free up staff for higher value work’, reducing ‘customer contact’, and moving from responsive to predictive behaviour.  

‘HMRC is exploring emerging technology, for example robotising activities and looking at what robots can do,’ said Hawksworth. ‘What robots allow us to do is remove the real low level processing that we do in the back office.

‘We released “Tax credit skill” in the Alexa skills store in June 2018, which answers basic questions about tax credits and points them to guidance, and then there’s Ruth, HMRC’s virtual assistant. Ruth has handled over five million queries since it was launched.

‘We are not at the Google level [for intelligent bots], we need to do a bit more on humanic programming.’

Another breakthrough area of technology is Blockchain, increasingly used throughout banking and financial services, and is the underlying technology for ledgers for cryptocurrency.

Hawksworth gave a word of caution, stating: ‘We have no plans to rush into large scale adoption – we are doing some proof of concept work, exploring cross-border transfers. We are not in a rush to jump in and say that Blockchain will be the solution.’

Future spending and investment in tax digitisation and supporting technology is also vital with the 2019/20 spending review on the horizon.

Following this month’s Budget, the government is set to discuss requirements for the 2019/20 spending review, calling on all departments to set out their future spending requirements.

HMRC will be contributing heavily to this in terms of flagging future development plans. The last spending review in 2015/16 saw the launch of initial plans for the development of total tax digitisation and the launch of the concept for Making Tax Digital reporting.

Report by Sara White

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