Digital revolution at HMRC left 99,000 UK taxpayers on hold over five-day fiasco

Technology resilience gets red rating in tax collector's annual report

Poor IT performance caused a five-day shutdown of the UK tax authority's phone services in December last year, affecting around 99,000 citizens.

According to the annual report for His Majesty's Revenue & Customs (HMRC), during the 2022-2023 tax year, the government department's customer service was adversely affected by IT problems, particularly towards the end of 2022.

"Between 1 and 5 December 2022, HMRC closed all of its telephone-based services due to poor call quality and the inability of advisers to access relevant information. Webchat was also unavailable at this time," official government auditors said in the report [PDF].

The department estimated it would have handled around 99,000 calls from taxpayers at the time the telephone services were suspended. The specific cause was not revealed. In 2022-2023, HMRC recorded 45 separate instances of significant disruption to its IT services, up from 25 in 2021-2022.

HMRC is in the middle of its Making Tax Digital transformation program, which kicked off in 2015. This is designed to "modernise HMRC's separate IT systems for three business taxes – VAT, Income Tax Self Assessment and Corporation Tax – and require business taxpayers to keep and submit quarterly digital tax records."

The National Audit Office, which inspected HMRC's annual report, found last month that the initial time frame for the program was unrealistic and has since faced repeated delays and rephasing, undermining its credibility and increasing costs.

The tax agency said in the report that its Technology Sourcing Programme (TSP) had achieved £11 million of efficiency savings in 2022-2023 – less than 1 percent of its lifetime budget of £7.1 billion – "by replacing existing IT contracts with new, more efficient services and suppliers."

The TSP began in 2020 and is designed to shape the future structure of the IT function within HMRC by "disaggregating" a smaller number of aged IT service contracts, repackaging them and taking them to market, according to the government's Infrastructure and Projects Authority (IPA) in March 2022.

"By the end of June 2022, the Programme will have achieved its next milestone, delivering new contracts and to exit our prime contracts whilst protecting live service and tax collection," it said at the time.

The annual report points out that HMRC remains party to major contracts "that are significant in ensuring that it can deliver its core services."

"Our IT services are provided through contracts with Capgemini, Fujitsu, Accenture and Nasstar, valued approximately at £884 million in total, each year," it said.

Fujitsu and Capgemini were part of the Aspire arrangement, a £10 billion deal which began in 2004 and accounted for 84 percent of HMRC's technology spending between April 2006 and March 2014.

The department had planned to replace Aspire in 2017, but it has continued to sign extensions with Fujitsu and Capgemini to support legacy systems once supported under the deal. Last year, HMRC told The Register that Aspire would come to an end in June 2022.

In its assessments of risks, HMRC rated its use of data poorly. "We face significant and ongoing issues with our capability to exploit data and these constrain our productivity, effectiveness and efficiency, which means that this risk is currently rated red," it said.

Technology resilience and reliability got the same risk rating. "This risk is red due to continued reliance on old and ageing IT systems with an increased risk of inability to meet operational needs," it said

In the 2021 Spending Review, HRMC received Treasury funding to modernize its IT estate and strengthen infrastructure, security and data governance under the banner of Securing Our Technical Future (SOTF). It has migrated 62 percent of services from legacy datacenters as HMRC moves to new hosting platforms, the report said.

"Activities to remove or minimise these risks continue, with security enhancements completed for 59 systems at the end of March 2023," it said.

Last year, the IPA said the SOTF program would help it exit three datacenters, "the contracts for which expire in 2022 (a new contract has been put in place to ensure HMRC Services can continue to be supported until Dec 2023)."

"We run one of the largest and most complex IT estates in the UK, so updating our technology will always be a continuous process. But thanks to our work this year, our systems will perform better and be easier to update – benefitting customers and colleagues alike," Jim Harra, chief executive and first permanent secretary, said in the report. ®

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