Online tax filing saves £126m - but HMRC could do better, says NAO

HM Revenue and Customs (HMRC) has saved £126m from online tax filing - but may not be getting maximum benefit from Web-based tax collection, says the National Audit Office in a new review of the taxman'  online activities.

NAO says HMRC cannot demonstrate that the benefits are being maximised in its report on the expansion of online filing of tax returns.

"Significant improvement is needed in its understanding of costs and benefits to inform future development," said the NAO.

But the NAO report also welcomes the fact 11.5m British taxpayers have submitted one or more tax returns online, including VAT, corporation tax and self-assessment, in the past five years.

"HMRC's expansion of online filing has been a real achievement," said Amyas Morse, head of the spending watchdog. "The programme is largely complete, on time and budget and more customers are filing online. It is an integral part of the Department's drive to increase efficiency."

However, the body also cautions HMRC cannot demonstrate whether it is maximising benefits, as it does not yet fully understand the relative costs of dealing with paper and online returns or the costs and benefits of seeking greater take-up.

HMRC should proceed with its plans to identify the ICT costs of online filing services and ensure that current negotiations with the Aspire outsourcing consortium provide sufficient breakdown of cost information. 

In addition, NAO said that HMRC had originally planned to make greater savings than £126m. "The 2007 forecast was for savings of £145 million by the end of 2010-11 but the programme was subsequently 'rescoped' because of funding pressures," says the study.

Some users had concerns about the costs and usability of filing VAT and corporation tax returns online, and about delays in getting login details to access the self-assessment service during peak periods, it adds.