HMRC told to focus on IT transformation by Parliamentary committee

HMRC has spent too much of its IT budget on patching up legacy systems rather than modernising them. This is the opinion of the Public Accounts Committee (PAC), responsible for examining the value for money of Government projects, programmes and service delivery.

Drawing on the work of the National Audit Office the Committee holds government officials to account for the economy, efficiency and effectiveness of public spending.

PAC's most recent findings, published yesterday, were that the COVID-19 pandemic has shown the importance of an effective tax administration system, underlining the case for investment in a modern IT system. Of the additional costs incurred by HMRC as a consequence of the pandemic, the largest element, as of 11 September 2020, was the cost of IT at £53.2m (80%).

HMRC says that it has made some progress in its ambitious digital transformation but is looking for opportunities to reduce the risks facing its IT systems so that they are kept up to date and safe from cyber-attacks and catastrophic losses.

The Department accepts it should redress the balance between spending too much on legacy systems and not enough on investing for the future.

Since the PAC took evidence, HMRC has secured £268m in the November 2020 Spending Review to fix its outdated IT, to ensure its core systems are secure and support better administration.

According to the PAC findings, HMRC should refocus IT investment on modernisation for the future, while retaining resilience, so it can move on from the need to simply keep patching up legacy systems.