HMRC's Transformation Roadmap

The government has published a Transformation Roadmap outlining the government’s vision for a more efficient, modernised and automated tax and customs system. The Roadmap is based on the government’s three priorities of: improving day-to-day performance for individuals and businesses; closing the tax gap; and driving reform and modernisation of the UK’s tax and customs system.

As the government sees it, a “transformed tax administration system will be more automated, more focused on self-service, and better set up to get things right first time. That means closing the tax gap through system-wide changes to policy and practice, using technology to give people more direct control of their tax affairs, and having adaptive and secure IT to underpin our operations.”

At the heart of the changes lies digital transformation of HMRC’s services with more digital self-serve options for taxpayers to provide greater control over their tax affairs and complete routine tasks online or in the app without needing to call or write. This, it is hoped, will free up HMRC staff for more complex matters.

Annex B to the Roadmap sets out a list of planned deliverables in the area of digital improvements across the range of taxes.

Closing the tax gap

The tax gap– the difference between the amount of tax actually collected and HMRC’s estimate of the full amount of tax payable - stands at 5.3% based on the most recent data from 2023 to 2024 and the government is determined to reduce it. Whilst accepting that the vast majority of customers try to get their tax right and that complexity in the tax system can lead to honest errors and careless mistakes, HMRC see that there has also been an increase in cases where taxpayers deliberately under-report or hide their income and manipulate tax rules.

To address the tax gap, HMRC will be “investing in its people, services, standards and technology”. AI and third-party data will improve identification of compliance risks and the actions needed to prevent them. This includes greater use of AI analytical tools to assess risks and to provide automated nudges to help taxpayers pay what they owe. In addition, the government has agreed extra investment for 5,500 new compliance officers and 2,400 more debt management officers. HMRC will also increase its efforts to counter wealthy and offshore tax evasion with “hundreds of expert officers being recruited to focus on high-risk cases, collaborating internationally to target the agents, accountants and lawyers who enable others to hide money offshore”. As announced at Spring Statement 2025, the aim is that, over the next 5 years HMRC will expand its counter-fraud capability to increase the number of annual charging decisions for the most harmful fraud by 20%, compared to current levels, to 600 per year by 2029 to 2030.

HMRC is taking a multi-faceted approach to address the small business tax gap through “digitalisation, use of third-party data, and improving standards in the tax advice market”.

New standards will come into effect for intermediaries operating in the tax and customs system, including the requirement for tax advisers to register with HMRC. Following a consultation published alongside the Spring Statement 2025, the roadmap confirms plans to enhance HMRC’s powers and sanctions to act against tax advisers who facilitate taxpayer non-compliance.

Reform and modernisation of the tax and customs system

The Roadmap recognises that reforming and modernising how HMRC operates is needed to ensure that HMRC is able to adapt to future changes to the tax and customs landscape. HMRC needs to reform and modernise the fundamental infrastructure of tax and customs administration. Over the spending review period, HMRC will overhaul its legacy IT infrastructure and invest heavily in AI, data capabilities and new platforms that increase the security and efficiency of HMRC’s operations and provide an improved picture of a taxpayer’s tax affairs and compliance risks closer to real-time.

HMRC will work with other UK government departments and devolved bodies to share data and trial processes with the potential to improve its operation.

The Roadmap confirms that HMRC does not intend to introduce Making Tax Digital for corporation tax, but will develop “an approach to the future administration of corporation tax that is suited to the varying needs of the diverse corporation tax population”.

A future vision for the tax and customs system

To achieve the necessary transformation of HMRC and the wider tax and customs system efforts will continue beyond the next spending review period. In particular, HMRC plans to increase and expand its use of AI to target compliance activity, guide taxpayers to the right advice, follow up on the minority that have not paid the right tax, and empower officers to work more effectively. HMRC is making use of machine learning and Generative AI to streamline administrative tasks such as summarising customer calls.

HMRC will develop future plans in partnership with key stakeholders including tax advisers, software developers and the banking and payments sector. HMRC will continue its regular dialogue with these groups to consider the potential for technology to transform the tax and customs system, identifying any barriers or challenges.