23rd Report - The cost of the tax system
Select Committee
Public Accounts Committee
HC 645
30 April 2025
Government Response (AI assessment · 36 of 39 classified)
Accepted
31
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Twenty-third report from Session 2024-26 · published 18 Sep 2025
Recommendations & Conclusions
6 results
9
Conclusion
HMRC bears minimal additional costs for Scottish Income Tax administration, funded by the Scottish Government.
Conclusion
We asked HMRC about the cost implications of running the Scottish Income Tax system. HMRC said the way it administers Scottish Income Tax is same as for UK Income Tax. The Scottish Government pays for the “bit more money” HMRC …
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HM Treasury
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17
Conclusion
HMRC prioritises additional support to large businesses for managing significant tax revenue risks.
Conclusion
We asked HMRC why it provided additional support to large business. HMRC told us customer compliance managers were there to manage the risks large business pose to tax revenue and not to give them a better 25 HMRC has reported …
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HM Treasury
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19
Conclusion
Not Addressed
HMRC lacks sufficient analysis on upstream and downstream compliance costs.
Conclusion
HMRC explained that its strategy is to promote good compliance and prevent non–compliance (collectively known as ‘upstream’ compliance), and this is “bearing fruit,” with upstream yield increasing to about a third of all yield in 2023–24. HMRC considers that upstream …
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Government Response Summary
The government claims the recommendation is implemented but does not address the committee's observation that HMRC lacks sufficient analysis of costs and marginal returns between upstream and downstream compliance work, instead providing updates on compliance yield and staff recruitment.
HM Treasury
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31
Conclusion
HMRC acknowledges security concerns with third-party Making Tax Digital software, setting strict specifications.
Conclusion
We asked HMRC whether there were potential security concerns that could be posed by the third–party MTD software taxpayers use to submit their tax returns, including whether there were risks to HMRC’s own systems.63 In written evidence provided after our …
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HM Treasury
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38
Conclusion
Not Addressed
HMRC demonstrates limited use of technology in promoting e-invoicing
Conclusion
The written evidence received from Dr Edidiong Offiong Bassey also suggests that HMRC is not making the best use of technology. In particular, he indicated there has been limited promotion in the UK of electronic invoicing and electronic fiscal devices …
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Government Response Summary
The government agrees generally with the "recommendation" (implied, as the item is a conclusion) and outlines HMRC's existing and planned initiatives using AI, including chatbots, Copilot, and call summarisation tools, without specifically addressing the conclusion's point about electronic invoicing and fiscal devices.
HM Treasury
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39
Conclusion
Not Addressed
HMRC's e-invoicing consultation explores information reporting requirements for businesses
Conclusion
We asked HMRC about its joint consultation with the Department for Business & Trade on e–invoicing which it launched in February 2025. HMRC said e–invoicing has the potential to help businesses and build tax compliance into the way they run …
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Government Response Summary
The government's response focuses entirely on HMRC's use of AI and its initiatives in this area, without addressing the committee's observation or implicit query about e-invoicing.
HM Treasury
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