HMRC's annual report raises concern over tech resilience

Poor IT performance left 99,000 UK taxpayers on hold for five days

Poor HMRC IT performance last December led to a five-day phone service shutdown, impacting approximately 99,000 taxpayers.

"In 2022-23, HMRC's customer service performance was adversely affected by IT performance problems, particularly towards the end of the 2022 calendar year," official government auditors said in the organisations' annual report [pdf] presented to the House of Commons.

"For example, 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. HMRC estimates it would have handled approximately 99,000 calls from taxpayers during the period the telephone services were suspended."

While the specific cause was not disclosed in the report, a letter from HMRC chief executive Jim Harra to parliament's Treasury Committee in December noted that the problems were believed to have stemmed from a significant surge in online traffic, triggered by a change introduced on 30th November.

This alteration affected the digital traffic management profile on HMRC's IT infrastructure, leading to the shutdown.

Several online and telephone services were affected over a five day period.

The service most impacted was the New Computerised Transit System (NCTS), a platform traders use for electronically submitting international transit declarations.

Disruptions nearly double

HMRC noted a notable increase in the number of significant disruptions to its IT services in 2022-23. It logged 45 total separate instances during this period, a substantial rise compared to the 25 recorded the previous year.

HMRC allocated an extra £100 million towards IT contracts in its last fiscal year. The department's rationale was to prioritise the advancement of its tech infrastructure while simultaneously diversifying its supplier base, aiming for modernisation and enhanced efficiency.

"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 played important roles under the Aspire arrangement, a £10 billion deal that began in 2004.

Last year, Capgemini secured a government contract valued at £51 million, designating the firm as the exclusive supplier responsible for providing support to HMRC's Enterprise Tax Management Platform, as well as the Enterprise Operations Run & Associated Change Services.

"Business cases omit significant costs"

In 2015, HMRC launched the Making Tax Digital (MTD) transformation programme, aiming to modernise its IT systems for three major business taxes: namely VAT, income tax self assessment and corporation tax.

As part of this initiative, business taxpayers are required to maintain and submit quarterly digital tax records, which is intended to streamline and improve the tax reporting process.

However, the National Audit Office (NAO) said last month that the original time frame set for the MTD programme was unrealistic.

"The repeated delays and rephasing of Making Tax Digital have undermined the programme's credibility and increased its costs. They put at risk the support of taxpayers and delivery partners, including those who are essential to the programme succeeding," said Gareth Davies, head of the NAO.

"Our audit identified the omission of significant costs from some business cases. It is obviously important that business cases for major programmes such as this contain all the relevant information to support decision-making."