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The expansion of online filing of tax returns

HMRC’s programme to increase online filing of tax returns has made significant progress. A National Audit Office report today has highlighted the Department’s achievement so far in increasing take-up rates and doing so on time and within a reduced budget. HMRC needs a better understanding of the benefits and costs to customers and how its online filing costs compare to those for paper returns.

HMRC was set an ambitious timetable to expand the use of online filing and now more than 11.5 million customers a year are submitting one or more tax returns online, generating significant savings. Take-up rates have increased significantly, particularly after mandatory online filing requirements have come into force. Nevertheless, take-up rates on some taxes (VAT, Corporation Tax and Self-Assessment) have been below original forecasts and HMRC has lowered its forecasts in the light of take-up achieved so far.

Customers generally recognise the efficiencies and practical benefits that online filing offers although HMRC has yet to measure whether the anticipated benefits and costs to customers are being achieved in practice. Some users have 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 online service during peak periods. Levels of satisfaction with the assistance offered through various helpdesks also vary.

Online filing is delivering significant savings to HMRC, an estimated £126 million so far. The 2007 forecast was for savings of £145 million by the end of 2010-11 but the programme was subsequently rescoped because of departmental-wide funding pressures. It 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’s expansion of online filing has been a real achievement. The programme is largely complete, to time and budget, and more than 11 million customers are filing online. It is an integral part of the Department’s drive to increase efficiency. "However, HMRC cannot demonstrate that the benefits are being maximised. Significant improvement is needed in its understanding of costs and benefits to inform future development."

Amyas Morse, head of the National Audit Office

Notes for Editors

  • By the end of 2010-11, take-up rates for PAYE in-year returns and Income Tax Self Assessment had increased to 94 per cent and 77 per cent respectively, broadly in line with forecasts. The rates for VAT and Corporation Tax had increased to 67 per cent and 42 per cent, respectively, each some 20 per cent below forecast. Rates for PAYE, VAT and Corporation Tax have increased further during 2011-12. In the light of actual rates achieved and greater knowledge of customer behaviour, HMRC has lowered its original forecasts of 100 per cent take-up by 2012 to around 97 per cent by 2013-14 for the three business taxes. The 2013-14 forecast for Self Assessment is 84 per cent.

  • Press notices and reports are available from the date of publication on the NAO website, which is at https://www.nao.org.uk/. Hard copies can be obtained from The Stationery Office on 0845 702 3474.

  • The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 880 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

PN: 63/11