Internal Expert of The Year

 

Tax does have to be taxing.



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "

The Living Brand"

HMRC’s Transformation Roadmap: Ambitious Promises Meet a Troubled Track Record

 

On July 21, 2025, HM Revenue and Customs (HMRC) released its Transformation Roadmap, a £7 billion-a-year plan to modernise the UK’s tax and customs system by 2030. Aimed at achieving 90% digital interactions, closing the 5.3% tax gap, and delivering £773 million in efficiencies by 2028-29, the roadmap promises a digital-first tax authority with AI-driven compliance and simplified processes.

 Championed by Exchequer Secretary James Murray MP, it includes over 50 IT projects, new online services, and 7,900 additional staff. However, HMRC’s long history of underperformance, from botched IT rollouts to poor customer service, casts a shadow over these lofty goals. Below, we analyse the roadmap’s strengths and weaknesses, grounding our assessment in HMRC’s well-documented failures to deliver on past promises.

The Good: Aspirations Amid Scepticism

1. Digital-First Vision

The roadmap’s goal of 90% digital interactions by 2030, anchored by a new online Pay As You Earn (PAYE) service for 35 million taxpayers, aims to streamline tax management via the HMRC app and Personal Tax Account. AI-driven nudges to prevent errors during tax submissions could reduce compliance burdens for honest taxpayers. If successful, this could align with global trends toward digital tax systems. However, HMRC’s track record—such as the troubled 2016 Making Tax Digital (MTD) rollout, plagued by delays and software glitches—suggests execution will be a challenge. The Low Incomes Tax Reform Group (LITRG) welcomes the digital focus but warns that digital exclusion risks leaving vulnerable taxpayers behind, a problem HMRC has repeatedly failed to address adequately in past digital initiatives.

2. Tackling the Tax Gap

The roadmap’s commitment to closing the 5.3% tax gap (2023-24) by hiring 5,500 compliance officers and 2,400 debt management staff, supported by AI tools, targets an additional £7.5 billion in annual revenue by 2029-30. Measures like cracking down on offshore evasion and increasing fraud charging decisions by 20% sound promising. Yet, HMRC’s history of ineffective enforcement—evidenced by the 2019 Loan Charge debacle, which misjudged contractor tax schemes and led to widespread hardship—raises doubts about its ability to implement sophisticated AI-driven compliance without errors or unfair outcomes. Past overzealous pursuits have often alienated taxpayers rather than recovered revenue.

3. Simplification and Stakeholder Engagement

Simplifying tax processes and integrating the Valuation Office Agency (VOA) into HMRC by April 2026 could streamline property tax administration. Collaborating with tax advisers and software providers, alongside requiring adviser registration, aims to raise standards. The roadmap’s use of operational sandboxes to test services is a nod to private-sector innovation. However, HMRC’s past attempts at simplification, like the 2010 Real Time Information (RTI) system, were marred by errors that frustrated employers and delayed compliance. Stakeholder engagement has often been superficial, with groups like the Bonded Warehousekeepers Association noting HMRC’s tendency to consult but ignore feedback.

4. Support for Vulnerable Taxpayers

The roadmap pledges to maintain phone and in-person support for digitally excluded or vulnerable taxpayers, a critical nod to inclusivity. But HMRC’s customer service record is abysmal—2023 saw average call wait times of 25 minutes, with 10% of callers hanging up before reaching an agent. Promises of accessible support ring hollow when HMRC has consistently failed to resource helplines adequately, leaving taxpayers stranded during peak filing periods.

The Bad: A Legacy of Failure Looms Large

1. Unrealistic Ambitions

The 90% digital interaction target by 2030 is ambitious but ignores HMRC’s history of overpromising and underdelivering. The 2005 merger of Inland Revenue and Customs Service promised modernisation but led to years of chaos, with lost records and delayed refunds. The roadmap’s reliance on over 50 IT projects is daunting, given HMRC’s track record of botched IT implementations—like the 2018 MTD for VAT rollout, which overwhelmed small businesses with compliance costs. X posts from users like @DavidMenziesCA highlight scepticism about HMRC’s capacity to deliver complex digital infrastructure on time or within budget.

2. Scrapping MTD for Corporation Tax

HMRC’s decision to abandon MTD for Corporation Tax (section 5.2) is a glaring misstep, signalling a retreat from digital modernisation. This move, noted on X by @TaxProUK, has left businesses uncertain about future compliance requirements. HMRC’s failure to propose a clear alternative echoes its mishandling of MTD’s phased rollout, which saw multiple delays and scope reductions since 2016. This decision undermines confidence in the roadmap’s digital vision and suggests HMRC is already backtracking on key commitments.

3. Over-Reliance on AI

The roadmap’s heavy bet on AI for compliance, nudges, and debt management assumes technological reliability that HMRC has rarely achieved. Past attempts at tech-driven solutions, like the 2014 Connect system for risk profiling, led to false positives and unfair penalties for compliant taxpayers. As @StuartMaggs on X notes, the roadmap’s AI focus, wrapped in vague jargon, risks oversimplifying complex tax issues. Without transparent safeguards, AI could amplify errors, especially given HMRC’s poor data management history, as seen in the 2007 loss of 25 million child benefit records.

4. Workforce and Cultural Inertia

Hiring 7,900 new staff sounds impressive, but HMRC’s chronic understaffing and high turnover—evidenced by a 15% vacancy rate in 2022—suggest challenges in recruitment and retention. The roadmap’s admission that it “will not always get everything right first time” is a candid but worrying acknowledgment, given HMRC’s pattern of prolonged disruptions, like the 2020 Self-Assessment portal outages that delayed filings. Cultural resistance to new systems, as seen in slow staff adoption of RTI, could further derail progress.

Reality Check: Can HMRC Break the Cycle?

HMRC’s *Transformation Roadmap* offers a compelling vision but is haunted by decades of mismanagement. From the 2007 data breach to the 2019 Loan Charge controversy and ongoing customer service failures, HMRC has consistently struggled to execute ambitious reforms. The roadmap’s goals—digital transformation, tax gap reduction, and simplification—are laudable but hinge on overcoming entrenched inefficiencies. The abandonment of MTD for Corporation Tax and vague AI plans suggest HMRC may already be setting itself up for failure. Stakeholders, including LITRG and X users like @TaxProUK, demand transparency and regular progress updates, but HMRC’s history of poor communication offers little reassurance.

To succeed, HMRC must break from its past by prioritising robust project management, genuine stakeholder input, and realistic timelines. Without these, the roadmap risks becoming another chapter in HMRC’s saga of unfulfilled promises, leaving taxpayers and businesses to bear the cost of delays and errors. For now, the roadmap is a high-stakes gamble—one that HMRC’s track record suggests it is ill-equipped to win. Taxpayers await proof that this time will be different.

Tax does have to be taxing.



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC’s Slow March Toward AI: A Missed Opportunity for Transformation

The recent announcement that HM Revenue and Customs (HMRC) has established a “landing zone to safely exploit” generative artificial intelligence (AI) in its 2024/25 annual report sounds promising on the surface. It signals a step toward embracing cutting-edge technology to streamline operations and enhance public services. However, beneath the optimistic rhetoric lies a troubling reality: HMRC’s adoption of AI has been frustratingly slow, lagging behind both the private sector and the transformative potential of this technology. While the establishment of a dedicated AI framework is a welcome move, it’s hard to shake the sense that HMRC is playing catch-up in a race where others have already taken the lead.

A Decade of Hesitation

HMRC’s journey with AI is not new. As early as 2017, the organisation was exploring automation and machine learning, with initiatives like the Automation Delivery Centre aiming to automate 10 million processes by 2018. The Connect system, in use for over a decade, has been a cornerstone in combating tax evasion by aggregating data from diverse sources like the Land Registry and online marketplaces. Yet, despite these early forays, HMRC’s progress in leveraging more advanced AI, particularly generative AI, has been glacial. The private sector—think tech giants, financial institutions, and even mid-sized startups—has been harnessing AI for years to optimise processes, personalise customer experiences, and drive innovation. Meanwhile, HMRC’s efforts have felt like cautious tiptoeing rather than bold strides.

The Public Accounts Committee’s (PAC) recent warning underscores this lag, stating that HMRC is “not well-placed to take advantage of the opportunities offered by technology, such as the development of artificial intelligence.” This critique stings because it highlights a systemic issue: a lack of urgency and strategic vision. While HMRC touts its “landing zone” for generative AI, the reality is that this framework feels like a belated response to a technological revolution that’s already reshaping industries worldwide.

The Promise of AI for HMRC

The potential for AI to transform HMRC’s operations is immense. Generative AI, capable of producing text, summarising data, and even generating code, could revolutionise how HMRC interacts with taxpayers. Current use cases, such as summarising customer helpline calls or powering chatbots for online advice, are promising but limited in scope. Imagine a world where AI-driven analytics predict tax evasion with pinpoint accuracy, where chatbots provide real-time, personalised guidance to taxpayers, or where AI streamlines recruitment and compliance processes to save time and resources. HMRC’s own report highlights tools like “Skill Scribe,” which simplifies recruitment, and a regional insights tool for labour market analysis—proof that the technology can deliver when applied.

Yet, these initiatives are still in their infancy. The department’s participation in a cross-government AI chatbot pilot and its use of AI for enhanced compliance targeting and fraud detection are steps in the right direction, but they feel like pilot projects rather than a comprehensive strategy. The fact that only 7,225 staff members completed AI-focused training in 2024/25, while commendable, is a drop in the bucket for an organisation of HMRC’s size. Scaling up AI adoption requires not just training but a cultural shift—one that embraces risk-taking and innovation over bureaucratic caution.

The Risks of Moving Too Slowly

HMRC’s slow adoption of AI isn’t just a missed opportunity; it’s a risk to its mission. Tax evasion and fraud are evolving, with criminals leveraging AI to create sophisticated scams, from phishing to voice cloning. A 2025 government report on the safety and security risks of generative AI warns that criminals are adopting the technology at the same pace as the general population, amplifying threats like fraud and data harvesting. If HMRC doesn’t accelerate its AI capabilities, it risks being outmanoeuvred by those it seeks to regulate.

Moreover, the public expects more from government services in the digital age. Taxpayers, accustomed to seamless experiences from private-sector platforms, are frustrated by clunky processes and long wait times. AI could alleviate these pain points—scheduling appointments, personalising taxpayer support, or automating repetitive tasks to free up staff for complex cases. But every year HMRC delays, it erodes public trust and misses chances to improve service delivery.

Ethical Concerns and the Need for Speed

To its credit, HMRC is taking steps to address ethical concerns, with an AI Ethics Working Group overseeing mandatory processes and ensuring transparency. This cautious approach is necessary—AI misuse could lead to biased outcomes or privacy breaches, as highlighted by the Information Commissioner’s Office and the UK’s AI governance frameworks. However, caution shouldn’t mean paralysis. The private sector has shown it’s possible to balance innovation with ethical safeguards, and HMRC must learn to do the same.

The “landing zone” concept is a step toward safe AI adoption, but it’s telling that it’s framed as a starting point rather than a mature strategy. Other government bodies, like the Government Digital Service (GDS), have been experimenting with AI for years, with projects like the GOV.UK chatbot showing tangible results. HMRC’s delay in reaching this stage suggests a lack of agility, perhaps rooted in bureaucratic inertia or resource constraints.

A Call for Bold Action

HMRC’s “landing zone” is a sign of progress, but it’s not enough. To truly harness AI’s potential, HMRC must move beyond pilot projects and incremental training. It needs a comprehensive AI strategy that prioritises rapid deployment, workforce upskilling, and collaboration with private-sector innovators. The government’s broader AI Opportunities Action Plan, which aims to make the UK an “AI superpower,” sets an ambitious tone. HMRC must align with this vision, not trail behind it.

The UK has a proud history of technological leadership, from Alan Turing’s foundational work to modern AI pioneers like DeepMind. HMRC, as a critical public institution, has a responsibility to embody this legacy. The establishment of a “landing zone” is a start, but it’s time for HMRC to stop taxiing on the runway and take flight. The longer it delays, the further it falls behind in a world where AI is no longer the future—it’s the present. 

Tax does have to be taxing.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tax Dodger Honoured

 

Tax does have to be taxing.



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC’s £2 Million Blunder: A Scathing Indictment of Negligence and Incompetence

HM Revenue & Customs (HMRC) has once again proven itself to be a masterclass in bureaucratic ineptitude. According to a recent report by *The Telegraph*, HMRC employees have managed to lose or have stolen a staggering £2 million worth of taxpayer-funded laptops and mobile phones over the past five years. That’s right—£2 million of public money squandered on devices that have vanished into thin air, with roughly 10 mobile phones and two laptops disappearing every single week in the past year alone. This is not just a minor oversight; it’s a grotesque display of carelessness that demands accountability and exposes the rot at the heart of HMRC’s operations.

Let’s break this down. The replacement cost for these lost and stolen devices is estimated at £1.5 million, with an additional £386,000 spent on replacing stolen equipment. HMRC officials, in a feeble attempt to deflect blame, have suggested that these figures *might* be inflated because some equipment is “found at a later date.” Found where? Under a desk? In an employee’s living room? Or perhaps in the hands of someone exploiting sensitive taxpayer data? The vagueness of their excuse is as infuriating as it is unconvincing. Even if some devices miraculously reappear, the fact remains that thousands of gadgets—each potentially containing confidential information—have gone missing under HMRC’s watch. This isn’t just about money; it’s about the systemic failure to safeguard assets and data critical to the nation’s financial infrastructure.

The security implications are chilling. HMRC handles the personal and financial details of millions of UK taxpayers. A lost laptop or phone isn’t just a financial loss; it’s a potential gateway for cybercriminals to access sensitive information. The *Guardian* reported that across 18 Whitehall departments, including HMRC, over 2,000 devices worth £1.3 million annually have been lost or stolen, raising alarms about a “systemic risk” to cybersecurity. HMRC’s contribution to this debacle is particularly egregious, given its role as the steward of taxpayer data. How can an organisation tasked with collecting the funds that keep the UK running be so cavalier with equipment that could compromise national security? The answer, it seems, lies in a toxic cocktail of incompetence, understaffing, and a culture of indifference.

This scandal comes at a time when HMRC’s customer service is already in freefall. As *The Telegraph* noted, in 1995, HMRC answered 99% of calls within 15 minutes. Fast forward to 2024, and 63% of callers are left languishing for over 10 minutes before speaking to an advisor. This decline in service quality mirrors the agency’s apparent disregard for its own assets. Posts on X echo this sentiment, with former HMRC employees like @lizkenward lamenting the loss of resources, experienced staff, and local offices due to government cuts. @boblister_poole’s scathing remark that “most seem to work from home—who’s got them now, a relative?” captures the public’s growing suspicion that HMRC’s work-from-home policies may be exacerbating the problem. When devices are scattered across employees’ homes rather than secured in offices, the risk of loss or theft skyrockets.

But let’s not stop at the devices. HMRC’s track record is a litany of failures that compound this outrage. Just last year, the agency was defrauded of £47 million through phishing attacks that compromised 100,000 taxpayer accounts, as reported by *The Telegraph* and *BBC News*. HMRC insisted this wasn’t a “cyberattack” but rather “organised crime phishing,” as if that distinction absolves them of responsibility. Deputy Chief Executive Angela MacDonald called the loss “very unacceptable,” yet offered little in the way of concrete solutions. Meanwhile, @premnsikka on X has highlighted HMRC’s failure to collect between £500 billion and £1.4 trillion in taxes since 2010, alongside £38 billion in write-offs due to fraud and bad laws. The message is clear: HMRC is not just losing laptops; it’s losing control.

The root cause of this mess lies in a combination of chronic underfunding, poor management, and a lack of accountability. HMRC’s workforce has been gutted by years of government austerity, leaving it understaffed and undertrained, as @payling_trevor noted on X. The shift to remote work, while necessary during the pandemic, has exposed glaring weaknesses in asset management. Laptops and phones aren’t just handed out with a Post-it note saying “don’t lose me.” They require robust tracking systems, regular audits, and strict protocols—none of which HMRC seems capable of implementing. Instead, we’re left with a tax authority that treats taxpayer money like pocket change and sensitive data like an afterthought.

The public deserves better. HMRC must be held to account with immediate action: a comprehensive audit of all devices, mandatory encryption and remote-wipe capabilities for every piece of equipment, and severe penalties for employees who fail to secure assets. Heads should roll at the top—starting with those who allowed this culture of negligence to fester. The government, too, must answer for slashing HMRC’s resources to the bone while expecting it to function as a world-class institution. As @premnsikka rightly asked, why haven’t governments changed laws or improved enforcement to stem these losses? The silence is deafening.

In the end, HMRC’s £2 million device debacle is more than a financial misstep; it’s a symbol of an agency in disarray, stumbling from one scandal to the next while taxpayers foot the bill. The UK cannot afford to let this incompetence slide. It’s time for HMRC to stop losing laptops and start regaining the public’s trust. 

Tax does have to be taxing.



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC’s Secret Deals: A Scandalous Betrayal of Taxpayers and Justice

 

The recent revelation that HM Revenue and Customs (HMRC) quietly offered large corporations an 85% discount on tax liabilities tied to the notorious loan charge scandal, while ruthlessly pursuing individual contractors with life-ruining bills, is nothing short of a grotesque abuse of power. Documents uncovered through a Freedom of Information request, brought to light by Conservative MP Greg Smith during Treasury Questions, expose a deeply unequal and morally bankrupt approach by HMRC. This is not just bureaucratic incompetence—it’s a deliberate, systemic injustice that demands accountability and reform.

The Loan Charge Scandal: A Brief Recap

The loan charge, introduced in 2017, is a controversial tax policy targeting disguised remuneration schemes—arrangements where workers, often contractors, were paid via non-taxable loans instead of salaries. These schemes, dating back to the 1990s, were often marketed as HMRC-compliant by trusted tax advisers, luring approximately 50,000 self-employed workers into financial arrangements they believed were legitimate. HMRC, however, retroactively deemed these schemes tax avoidance, pursuing contractors for back taxes, interest, and penalties, often resulting in bills that dwarfed their earnings. Tragically, the policy has been linked to at least 10 suicides, with countless others driven to bankruptcy, depression, and despair.

The Smoking Gun: Secret Deals for the Powerful

The bombshell dropped via the FOI request reveals that in 2015, a year before the loan charge was introduced, HMRC struck clandestine settlement deals with multi-million-pound companies involved in these same payroll loan schemes. These corporations—often major players in banking and financial services—were allowed to settle their tax liabilities for a mere 15% of what was owed, effectively receiving an 85% discount. Meanwhile, individual contractors, many of whom were coerced or misled into these schemes, were offered no such leniency. Instead, they faced crushing demands for 100% of the alleged tax owed, plus interest and penalties, with some bills exceeding their total earnings from the period in question.

Ray McCann, a former HMRC assistant director and leader of the ongoing loan charge review, admitted in 2019 minutes with Lord Amyas Morse that these “generous” corporate settlements included “significant discounts” not extended to contractors. McCann himself called this disparity discriminatory, noting that “contractors weren’t offered these terms” and that “settlement opportunities have always had a discount, and contractor one is the only one that didn’t.” This admission is damning—a clear acknowledgment that HMRC knowingly treated small-scale contractors far more harshly than corporate giants.

A Tale of Two Taxpayers

The hypocrisy is staggering. Large companies, with armies of lawyers and accountants, were quietly let off the hook with sweetheart deals, while ordinary workers—IT consultants, nurses, teachers, and others—were hounded relentlessly. For example, one contractor earning £13,000 annually was slapped with a £250,000 tax bill, a sum so disproportionate it defies reason. Meanwhile, corporations that facilitated these schemes, reaping millions in profits, paid a fraction of their liability and walked away unscathed.

This double standard isn’t just unfair—it’s predatory. HMRC’s own rhetoric claims the loan charge is about “fairness for all taxpayers,” yet their actions tell a different story: one where the powerful are coddled, and the vulnerable are crushed. The Loan Charge Action Group’s Steve Packham put it bluntly: “Ten people have killed themselves as a direct result of HMRC’s ruthless persecution of people who the Chancellor herself has described as ‘victims of mis-selling’.” Yet, HMRC allowed corporate enablers to escape with a slap on the wrist.

HMRC’s Complicity and Inaction

HMRC’s defence—that it never approved these schemes and that settlements are based on “individual facts”—rings hollow. Many contractors entered these schemes in good faith, relying on assurances from tax advisers and promoters that they were compliant. HMRC failed to act on red flags, such as DOTAS (Disclosure of Tax Avoidance Schemes) registrations, allowing these arrangements to proliferate for years. When it finally moved, it targeted the easiest prey—individual contractors—while largely ignoring the promoters and employers who designed and profited from the schemes.

The 2019 Morse Review, which led to some reforms, including limiting the loan charge’s scope to post-2010 loans, was supposed to address these injustices. Yet, HMRC’s continued pursuit of pre-2010 cases through alternative mechanisms like s684 notices shows a refusal to let go, even when the law’s clarity at the time was questionable. This relentless hounding, coupled with the revelation of secret corporate deals, undermines any claim that HMRC operates with integrity or fairness.

A Call for Accountability

MPs and campaigners, including Sarah Olney of the Liberal Democrats and the Loan Charge and Taxpayer Fairness APPG, are rightly demanding answers. They’ve called for contractors to be offered the same 15% settlement terms as corporations and for a full, independent inquiry into HMRC’s conduct. The parallels with the Post Office Horizon scandal are undeniable: a government agency pursuing ordinary people with devastating consequences, while those truly responsible—promoters and corporate enablers—evade accountability.

HMRC’s actions are not just a failure of policy but a betrayal of public trust. The agency’s secrecy, its discriminatory treatment of taxpayers, and its refusal to pursue scheme promoters with the same zeal it applies to contractors reveal a rotten core. The government must act swiftly: offer contractors the same settlement terms as corporations, pause all loan charge enforcement pending the current review, and launch a root-and-branch investigation into HMRC’s practices. Anything less is complicity in a scandal that has already claimed lives and livelihoods.

Conclusion

The loan charge scandal is a stark reminder of what happens when power is wielded without accountability. HMRC’s secret deals with large companies, while punishing contractors with crippling bills, expose a tax system rigged to favor the powerful. The human cost—10 suicides, countless bankruptcies, and untold suffering—demands justice. It’s time for the government to stop hiding behind HMRC’s excuses and deliver fairness to the victims of this egregious miscarriage of justice. The call for an independent inquiry is not just warranted—it’s urgent.

---
Tax does have to be taxing.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"