To avoid a crash, HMRC's digital journey may take longer than expected

14 June 2016

Andrew Hubbard

During the appearance of the new HMRC leadership team in front of the House of Commons Treasury Committee last week, two issues emerged which, though completely unrelated, show just how problematic new technology can be. They also cast further doubt on the timetable for the implementation of HMRC’s digital strategy.

We’ve talked a lot about the role of technology in the tax system in recent editions of this bulletin, prompted of course by HMRC’s digital agenda. While we wait for the detailed proposals to emerge after the end of referendum purdah it is opportune to step back and consider some of the wider aspects of technological change.

This reflection was prompted by the appearance last week of HMRC’s new leadership team before the House of Commons Treasury committee. Edward Troup and Jon Thompson had, I thought, a fairly easy session: no doubt the committee will toughen its act once the new team has started to establish itself.

Technology was there right from the beginning. Jon Thompson, the Chief Executive mentioned the plans for transformation of HMRC into a customer-centric business within the first minute of his evidence and discussed the digital journey. Andrew Tyrie, the committee chair, who is known to be a sceptic on HMRC’s digital programme made his views very clear when he reposted ‘I am always nervous when people talk about digital journeys; most of those seem to have ended up as crashes of one sort or another’. I anticipate many lively sessions before the committee over the coming years.

During the evidence two issues emerged which, though completely unrelated, show just how problematic technology can be. The first relates to the problem of tracking employment histories. HMRC is often used as a source where people want to get details of long-ago employments, such as in asbestos claims. It was explained that this creates very great practical issues for the department because the information is held on microfiches dating back to the 1940s and 1950s and the machines for reading these are not made any more.

HMRC is having to search on the internet for old machines and spare parts in order to maintain the ability of the department to read these microfiches. At the other end of the scale is the, to me, astonishing revelation that HMRC is No. 2 in the world list of brands subject to cyberattack. So all technologies bring their problems.

Had I been writing for Weekly Tax Brief in the 1950s I might well have been extolling the virtues of the new microfiche technology as something which would be able to store information indefinitely and make it retrievable at the press of a button. Now of course that all seems hopelessly old-fashioned. But equally the modern digital age, with its enormous benefits, also brings risks both now and potentially in the future. Perhaps my successor writing in 2050 will be wondering about the problems which are about to arise as the internet is being switched off because it is obsolete!

I’m not a luddite: I see the advantages of technological change and the way that it can transform working practices. But these two examples, from opposite ends of the technological scale, show just how difficult it is to make the right judgement calls on such critical matters - decisions made now could have repercussions far into the future. 

I am cautiously optimistic, not least because in my view there has been a sea change in HMRC’s whole approach to IT and in the capability of its IT teams, but we all have to be vigilant. 

The timetable for the implementation of HMRC’s digital strategy was always very tight and the delay in publication of the details because of the referendum has exacerbated the problem. I am all in favour of keeping the momentum going but it is in all of our interests to make sure that digital journey does end up without a crash - even if the journey takes a bit longer than expected.

For more information please get in touch with Andrew Hubbard, or your usual RSM contact.


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