UK tax collector falls short on digital efficiency, watchdog says

The UK’s tax collector is yet to reach the levels of efficiency its investment in digital services has led auditors to expect, according to a new report.

In its annual report on the performance of His Majesty’s Revenue & Customs (HMRC), the National Audit Office (NAO) has set out the challenges facing one of the biggest IT departments in the country as it struggles with a bewildering estate of legacy systems.

In 2024-25, HMRC spent £1.16 billion on IT and telecoms while collecting £858.9 billion in tax. In June’s Spending Review, the government said departments would perform a Zero-Based Review (ZBR) of budgets, taking a "digital-first approach" and involving chief digital and information officers.

The result was that HMRC received an additional £1.6 billion from 2026-27 to 2028-29 to “modernize and reform HMRC’s IT and data infrastructure”, the NAO said.

The extra money ...