Exchequer Secretary to the Treasury: 20 years of HMRC - reflections and looking ahead
Source: gov.uk (2025-03-12)

Exchequer Secretary to the Treasury, James Murray, sets out the government’s vision for the future of the UK tax authority.

Thank you very much for inviting me to come and speak to you today as we mark the 20th anniversary of His Majesty’s Revenue and Customs.

When I was thinking about giving this speech to you today, I wondered what my predecessor might have said at a similar event 20 years ago when HMRC was just being founded.

Of course, being strictly accurate, there was no post of exchequer secretary in 2005, and so whatever I assert my predecessor might have said, you can’t fact check that or disprove it.

But it made me think how different things would have been 20 years ago.

Twenty years ago, when HMRC was first created, the practice of online filing for Self Assessment was still something new – it was just five years old.

Back then, ministers certainly would not have been considering how to add new functions to the HMRC app – the first banking app was still more than five years away.

And families across the country would still face the prospect of filling in paper forms for child benefit for the whole of their children’s childhood with HMRC’s online solution still 18 years away.

But however much the way in which the way people interact with the tax and customs system has changed in the last 20 years, the next 20 years – even the next five years – offer the chance for far greater change than we have seen in the past.

And so, as technological opportunities accelerate, I as a minister and we as a government are determined to go further and faster to modernise HMRC.

That modernisation is crucial to improving value for money, to collecting revenue more efficiently, and to supporting economic growth and the Prime Minister’s Plan for Change.

So this year is not just year to reflect on HMRC’s work over the last 20 years, but also a crucial year to start delivering the future of the UK’s tax and customs system.

This is a year in which we will go further and faster to make sure businesses and individual taxpayers spend less time on tax and customs administration, and more time delivering the growth that will put more money in people’s pockets.

We are determined to cut waste, to challenge old ways of doing things, and to innovate at pace. We were elected to deliver change, and that is what we will do for people and businesses across the UK.

Last September, the Chancellor announced that I would take on the role of Chair of the HMRC Board.

It is the first time a minister has taken on that role, and this change has brought new opportunities for combining the political mandate on which my colleagues and I were elected with the insight of Non-Executive Directors and the Executive Committee, and the expertise of officials right across HMRC’s offices in every region and nation of the UK.

I have been determined to work with other members of the Board, the Executive Committee, and HMRC’s whole workforce to promote a culture of, and appetite for, greater innovation at HMRC.

A key part of this is learning from some of the most successful British businesses, incorporating their best practice and their approaches to change into HMRC.

To that end, I have led teams of senior HMRC officials to meet with organisations including Octopus Energy, Barclays, NatWest, John Lewis and Centrica, to find out about how they do business, to learn how they innovate in the digital space, how they create new solutions through their ‘test and learn’ approach to problem solving.

As a result, HMRC is now testing new ideas, inspired by what we have learnt from the private sector, through new operational sandboxes that have been running since the autumn.

At the same time, I have been working closely with software developers like Sage and Xero to launch our plans to roll out e-invoicing across the UK, and working collaboratively to develop and deliver Making Tax Digital. And I have been listening carefully to intermediaries including agents, like many of those who are in this room today, and who play such a key role in the tax system, and know how a fair, efficient, and modern tax system should be.

That is how I believe we will get HMRC ready for the future – combining my and my colleagues’ clear political mandate to deliver our Plan for Change, with the expertise of officials across HMRC, and the insight of businesses across the UK who are our partners in growing the economy.

Now, I know that when we talk about the need for change at HMRC, the subject of phone lines and waiting times does not take long to come up.

By the end of last year, though, day to day performance had improved. We met our call handling target during the final quarter of the last calendar year, and calls to our Agent Dedicated Line were being answered 30% more quickly.

It is inevitable that we will face exceptionally busy periods, like the Self Assessment peak, but I am determined we will see increasingly consistent performance over the next financial year.

I can also announce today that, following consultation with professional bodies and practising agents, including some of you in this room, from the end of this month, HMRC will launch a new service to provide a dedicated escalation route for agents with Self Assessment and PAYE queries which are over four weeks old.

A new, dedicated team of experienced technicians and advisers will adopt a ‘once and done’ approach, taking end-to-end ownership of cases and maintaining regular communication with agents.

This builds on the changes we announced last October where we combined PAYE and Self Assessment queries, introduced a dedicated option on the Agents Dedicated Line for repayment progress chasing, and launched agent webchat.

These improvements have been designed with you to address concerns that agents have raised with us, to enhance service efficiency, and to strengthen HMRC’s relationship with agents through a more accountable and streamlined approach.

But I know, improving customer service cannot be achieved simply by recruiting ever more people to answer the phones. We receive millions of calls every year from people who need to complete simple tasks – including over 200,000 calls from people asking for their National Insurance Number; something they can find in seconds using the app.

And so, as well as making sure those who need to speak to an adviser can do so, we are determined to accelerate the development of HMRC’s online and app services, and to drive more people toward using them.

The HMRC app now has more than 4.7 million users - 2 million more users than last year. We are testing the potential use of generative AI to point customers to the advice they need on gov.uk.

We know, that more automated and intuitive digital services are a win-win: they make it quicker and easier for people to get their taxes right, provide a better experience for customers, and ultimately mean we are collecting more of the tax that is owed.

That is why, from April we will go further by launching a new PAYE portal – a new, simple way for 34 million taxpayers to check the data that HMRC holds on their employments and pensions, to notify us of any changes, and to find simple explanations to understand the impact of changes on their tax codes.

And it is why we are today confirming our intention to raise the Income Tax Self Assessment reporting threshold for trading income from £1,000 to £3,000 within this parliament, and align this with new reporting thresholds for property and other taxable income, at £3,000 gross each.

This change to the trading income reporting threshold could lift around 300,000 customers out of the need to file a Self Assessment tax return. Around 90,000 will have no tax to pay and so will not need to report their trading income to HMRC at all, whilst those who owe tax will be able to use a new, simple online service to do so quickly and easily.

This change will avoid wasting customers’ and HMRC’s time and effort. It will help those people who are currently required to submit a tax return and potentially face late filing penalties even though they do not owe any tax.

It will free up traders’ time spent on tax administration, so they can instead spend their time growing their business, making it more of a success, and contributing toward the economic growth that is at the heart of our Plan for Change.

Now, underpinning that Plan for Change are, of course, sound public finances. At the Budget last October, our commitment to restoring economic stability and fiscal responsibility involved difficult decisions on welfare, spending, and tax.

In that context, it was more essential than ever for us to do everything possible to close the tax gap before considering any changes to tax policy. Unpaid tax not only impacts the Exchequer – it puts businesses who do pay the right tax at a competitive disadvantage and hurts economic growth.

And so, at the Budget, the Chancellor made clear that we are determined to go further and faster to close the tax gap and collect more of the tax that is due. The Chancellor announced the recruitment of an additional 5,000 new compliance caseworkers and funding for 1,800 debt collection officers over the course of this Parliament – and I am pleased to be able to say that around 600 new compliance staff will start work this month.

At the same time, HMRC will increase the use of AI to improve compliance targeting and help staff productivity, and, as announced at Autumn Budget, the government is investing £154 million to modernise HMRC’s debt management system to help us more effectively tackle debt.

We will overhaul our approach to offshore tax non-compliance by the wealthy, recruiting experts in private sector wealth management and deploying AI and advanced analytics to help identify and challenge those who try to hide their wealth, wherever they try to hide it.

At the same time, we are cracking down on some of the worst behaviours like ‘phoenixism’, where rogue directors abuse the insolvency regime by deliberately putting their business into insolvency to write off what is owed, both to other businesses and HMRC.

To tackle this problem, HMRC, Companies House, and the Insolvency Service have agreed a joint plan to tackle rogue directors that abuse the insolvency regime.

We will do so by increasing the use of securities, where HMRC demands upfront payment of tax from new companies, to double the amount of tax protected by 2026/27.

We will make more directors personally liable for the taxes of their company and double the issuing of liability notices by value during 2025/26.

And the plan will increase enforcement sanctions by the Insolvency Service, including 100 more director disqualifications in 2026/27 in cases involving phoenixism.

More widely, I am glad to announce today that HMRC will launch a new reward scheme for informants later this year, targeting serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes.

The scheme will take inspiration from the successful U.S. and Canadian ‘whistleblower’ models and will complement our existing rewards scheme, with informants rewarded with a percentage of any tax taken as a result of their actions.

And this spring we will publish a consultation on a package of measures to tackle promoters of marketed tax avoidance, whose contrived schemes deprive vital public services of funding and leave their clients with unexpected tax bills, alongside draft legislation on our plans to prevent abuse by non-compliant umbrella companies by April 2026.

These significant changes in policy, alongside the investment in our technology, our people and their skills will make it as easy as possible for individual taxpayers and businesses to pay the right tax from the outset, fixing problems at source and enabling us to make sure more of the money owed is paid.

The measures the Chancellor announced at the Budget were the most ambitious ever package to close the tax gap, and will enable HMRC to bring in an extra £6.5bn a year by 2029/30 – revenue to help fix our public finances, to get public services back of their feet, and to lay the foundations that we need for growth.

Of course, underpinning all of our activities is an ambitious programme of modernisation and reform.

Under this government, HMRC will become a digital-first organisation and so, later this year, following confirmation of Phase 2 of the Spending Review, we will publish an HMRC Transformation Roadmap, bringing together our strategic and transformation ambitions into a single, public document.

It will include details about how and when we will deliver the digital services that will mean a better experience for our 35 million individual taxpayers, for agents, and for the more than 5 million businesses in the UK.

But we are not waiting for the roadmap to be published to get changes underway. As we speak, HMRC is carrying out a test-and-learn trial of Voice Biometrics as part of its interaction with customers – a new way of making sure customers can get the support they need as quickly and clearly as possible, while keeping their data secure.

Voice Biometrics strengthen the security of our systems, safeguard customer data, and reduce call times. Customers’ voice recordings are converted into encrypted biometric data, a voice print, and stored securely in a data centre. HMRC is using the same innovative voice authentication technology which is already proving successful in many of the major banks and financial institutions globally.

Through the current trial, we are offering helpline customers the opportunity to use their voice as their password – to pass security checks faster and more securely. What we learn from this trial will then inform our plans to roll the system out more widely to all those who want to use it over rest of this year.

Digital service improvements will drive greater efficiency as, year-on-year, more taxpayers choose to use our digital services. I have therefore asked HMRC to explore, through legislation if necessary, how we can cut the amount of post we need to send out as a result – saving money and putting our service firmly into the digital era.

Modernisation and digitalisation are not just important for the tax system, but in customs too.

At the border, we are supporting traders with new technology, reducing their admin burden and speeding up the flow of trade. All exporters and importers are now using the new Customs Declaration Service - an important step towards a more efficient, digital, and trader-focused customs system.

Our ambition is to support digitalised trade and supply chains, ensure we are controlling the right goods in the right ways, and promote a high-quality customs intermediary sector.

Today, I can announce our technical pilot with the United States Customs and Border Protection to test digital solutions that will speed up processes for US and UK businesses trading goods with each other.

In 2024, that trade was worth a combined £115 billion to our countries. Our aim is to make supply chains between UK and US businesses more efficient through modernising how HMRC systems, international partners and businesses communicate with each other.

The digital pilot will look to use real time data – such as digital certificates and online identifiers - to make processes faster and more efficient.,

Through our overall approach, we are bringing cross-border trade into the 21st century with more seamless integration between the UK and our trading partners – making agile, iterative improvements in partnership with businesses and trade bodies.

To drive forward change and achieve our ambitions, we also need to change the way we do change.

Taking a test and learn approach, informed by our partners in business, by intermediaries, and by members of the British public, is crucial. By its nature, test and learn means not always getting things right first time – but it does mean we can try bold solutions, and find out what works for individual taxpayers and businesses in our country.

Making sure the tax administration system works for businesses is crucial to providing them with the conditions in which they can achieve their full potential when it comes to growth.

I know how crucial it is to scrap unnecessary bureaucracy, to remove restrictions, to drive technological change, and to provide certainty for investments to be made.

We are determined to stop unnecessary bureaucracy and regulation getting in the way of businesses’ efforts to thrive.

That is why, in January, we decided to cancel plans we had inherited that would have required employers to provide more detailed employee hours data from April 2026. We took this decision after listening to concerns raised by businesses and stakeholders including some of you in the room today.

To that end, I would like to acknowledge the great work of groups like the Admin Burdens Advisory Board (ABAB). The Chair of ABAB, Dame Teresa Graham, and other ABAB Board Members are here today and I want to thank them for their ongoing support in our work, and their advice on the issue of employee hours specifically.

We are determined to drive technological change for businesses too – and so, last month, we launched our consultation on cutting paperwork and improving business productivity by standardising and increasing the uptake of business e-invoicing.

E-invoicing can bring real benefits to businesses - simplifying processes, reducing errors, and helping businesses to get paid faster. I encourage everyone to engage with the consultation before it closes on 7 May.

We are determined to provide certainty and stability for businesses looking to invest. That is why, later in spring, we will launch a consultation on how we can better support businesses seeking to deliver major projects in the UK, through more upfront reassurance on their critical tax assumptions.

Agreeing the expected tax treatment of larger and more complex projects upfront means that businesses are less likely to undergo long-running, complex enquiries after the fact – giving them the confidence to invest now, and get on with delivering growth.

We will also consult in the spring on widening the use of advance clearances in Research and Development reliefs – with the aim of providing greater certainty for businesses planning to invest, while reducing error and fraud.

And we are determined to remove restrictions wherever possible. That is why we have listened to the views of organisations - including those in the creative industries, sports, and logistics - who want it to be easier to access relief from import duties for temporary imports that support short-term projects, exhibitions, or events.

I am pleased to announce that we will make simplifications and improvements to the Temporary Admission procedure: extending and simplifying time limits for some goods, removing some restrictions on who can use the procedure and what they can do with their goods, and making our guidance easier to understand.

Today, I have set out a substantial package of measures that begin to deliver on our ambitions.

I would like to end by focusing on the work of our stakeholders in this room, because it is only through the joint efforts of everyone who works in tax and customs that we will succeed.

Intermediaries play a major role in delivery against our priorities for HMRC:
- Tax software is increasingly used to speed up and simplify submissions to HMRC – reducing error and helping to close the tax gap.
- Tax advisers can help their clients get their tax right, reducing levels of non-compliance and demand on our phone and post services.
- And your experiences of operating in the tax system – particularly of interacting with our digital services - will help us to drive modernisation and reform.
You and your clients are an integral part of that future. As the number and range of intermediaries continues to grow, I am committed to work with you to raise standards and ensure that your customers stay compliant.

To be clear, while most tax advisors play a positive role in the smooth running of the tax system, we have seen examples of dishonest or incompetent tax advisors who cause harm to customers, add to the tax gap, and undermine everyone else who plays by the rules.

And so, from April 2026, it will be mandatory for tax advisors who interact with HMRC on behalf of clients to register with us – and this Spring, we will launch a consultation on options to enhance HMRC’s powers to take swifter and stronger action against tax advisers who facilitate non-compliance.

At the same time, it is my commitment to you that we will provide the digital services that agents need to operate effectively – starting with registration – and at the Autumn Statement, the Government committed £36 million to do just that.

I will always seek to act on your feedback where I believe it can provide a net benefit and reduce complexity, and where it will make it as easy as possible for people to do the right thing and for businesses to grow.

As I have made clear today, at the heart of our Plan for Change is this government’s mission to kickstart economic growth.

I am determined that HMRC offers a tax and customs system that leads the way in support of that mission – one that puts as few demands on the time of individual taxpayers and businesses as possible, whilst ensuring that everyone pays the tax that is due.

That is the tax and customs system of the future that I am determined to deliver, in partnership with people in this room and beyond.

As a government, we will not cease from going further and faster to cut waste and unnecessary bureaucracy, and to improve the efficiency of tax collection.

We will remain dedicated to raising the revenue the public finances need, whilst minimising the administrative burdens of the tax and customs system through a modern, digitised service fit for the years ahead.

Thank you for being part of what we are seeking to achieve. Thank you for listening, and thank you once again for inviting me to join