In July 2025, HMRC published their Transformation Roadmap explaining how they plan to meet the Government’s vision to modernise the UK tax systems to free up time for businesses to focus on growth. Taxpayers and agents alike will be keen to understand these changes in order to prepare and stay compliant.
The Exchequer Secretary to the Treasury has set out three priorities to work towards that vision. They are:
Improving day to day performance of HMRC for individuals and businesses
Closing the tax gap
Driving reform and modernisation of the UK’s tax and customs systems
We examine some of the headline plans to meet these priorities in greater detail below.
Improving day to day performance and overall taxpayer experience
The overarching goal for HMRC under this heading is to become “digital first” which means to utilise new and advancing technology (such as AI) to improve the taxpayer experience.
HMRC say that by 2030, almost all of the “straightforward queries” will be handled digitally or automatically. They aim to have at least 90% of taxpayer interactions handled digitally by the same deadline (up from the current 76%).
Some ways in which HMRC plan to become “digital first” include:
- Automating tax where possible similar to the current PAYE system. This will mean an intermediary (such as an employer, umbrella company or online platform) will deduct the tax at source. This information will then automatically prepopulate on tax returns.
- An increase in available online services to allow taxpayers and agents to self-serve online.
- Launch a new expenses service to enable PAYE taxpayers to submit claims for tax relief on their allowable expenses and upload supporting evidence all in one place.
- Pre-populating Self Assessment tax returns with Child Benefit data from April 2026 for those not reporting payments through their tax code.
- Continuing work to provide individual taxpayers with a view of their overall income and tax position in their digital account – building on work from the Single Taxpayer Account Programme.
- Digitalising the Inheritance Tax service from tax year 2027 to 2028 onwards to provide a modern, easy-to-use system, that makes submitting returns and paying tax simpler and quicker.
- Continue to provide targeted support for those who need it – adviser-led services will still be there for the small population of taxpayers who need them; for example, those who are digitally excluded, have complex tax or customs affairs, or find themselves in vulnerable circumstances.
These will be welcome changes for all stakeholders who currently struggle to reach the right advisers in HMRC, or are faced with significant wait times to resolve even simple queries.
Closing the tax gap
The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC and the amount that is actually paid. In 2023/24, the tax gap stood at £46.8 billion which is a concern. In the Spring Budget 2025, the Government announced the biggest ever package of measures to close the tax gap with a focus on targeting non-compliance.
HMRC’s compliance strategy is built around:
- preventing non-compliance – developing policies, processes and digital services that prevent opportunities for error, avoidance, and evasion.
- promoting compliance – high-quality, targeted guidance and nudging taxpayers to make correct tax returns.
- responding where compliance risks remain – prompting the taxpayer to correct their tax and customs declarations themselves or deploying a compliance officer to investigate and take action to ensure money owed is paid.
HMRC reports that modernising how they collect, and process data will make it easier to promote compliance. As above, some of the modernising will focus on the use of data to prepopulate returns and automatically register taxpayers for services they require to remain compliant.
Of course, Making Tax Digital (MTD) will improve taxpayers’ record keeping by requiring quarterly reporting to HMRC. The hope is that when the taxpayer comes to file their tax return, the majority of the information will already be in their tailored commercial software which will reduce errors on the final tax returns as well as make the process faster for the taxpayer.
Another important result to improving HMRC’s usage of their data is the increase in expected nudges to help taxpayers avoid making errors in their tax returns (both income tax and corporation tax returns) with the aim of getting tax affairs right the first time.
HMRC recognises that most taxpayers are trying to get their affairs right and that both taxpayers and advisers can make honest mistakes. There is already a Digital Disclosure Service in existence, however HMRC have announced plans to improve this service and provide taxpayers with an effective way to correct their tax affairs.
Of the £46.8 billion tax gap, HMRC estimates £5.4billion is attributed to cases where there is no avoidance, but where there is an interpretation of the law that results in a different tax outcome than intended by the legislation. HMRC say they will tackle this part of the tax gap by making guidance clearer and pursuing options for legislative changes in areas prone to interpretation challenges. Clearer guidance will help taxpayers to make informed decisions when filing their tax returns and is welcomed by advisers.
Debt Interventions
It is expected that there will be an increase in tax debt officers for HMRC to reduce HMRC’s aged receivable. Officers be deployed to support taxpayers who cannot afford to pay in full and to be stricter in enforcing debt enforcement powers for those who can afford to pay but do not.
We recently wrote about options available if you can’t pay your tax liability which outlines some of HMRC’s powers in this area.
Tackling fraud and economic crime
Over the next 5 years, HMRC will expand its counter fraud capabilities and create strong criminal deterrents for fraudsters. These criminal investigations will focus on wealthy fraud, offshore money hiding and organised criminal attacks.
HMRC has spoken about a reward scheme in the past and has now confirmed that they will launch an enhanced reward scheme for informants later this year. Informants will be rewarded with compensation linked to a percentage of any tax collected which they hope will act as a greater incentive for informants to come forward.
Tax avoidance
Marketed tax avoidance leads to revenue loss of around £500 million per year, and promoters often disappear once HMRC challenge their schemes, which invariably do not work, and leave taxpayers with unexpected bills. The consultation includes proposals to expand the scope of the Disclosure of Tax Avoidance Schemes (DOTAS) regime, tackle professionals designing or contributing to the promotion of avoidance schemes, new criminal offences, and new HMRC powers to investigate promoters and stop them from designing, promoting and selling tax avoidance schemes.
If you have been involved in a tax avoidance scheme and have not yet considered settling with HMRC, please contact our experienced Tax Disputes and Disclosures Team (details at the end of this blog) to assist you.
Lastly, to close the tax gap, HMRC want to raise the standards of advisers. 70% of taxpayers use advisers and HMRC wants to ensure that standards are high so that they and taxpayers can rely on the advisers’ work. They have announced an enhancement of powers and sanctions to act against tax advisers who facilitate taxpayer non-compliance.
Lastly, to close the tax gap, HMRC want to raise the standards of advisers. 70% of taxpayers use advisers and HMRC wants to ensure that standards are high so that they and taxpayers can rely on the advisers’ work. They have announced an enhancement of powers and sanctions to act against tax advisers who facilitate taxpayer non-compliance.
Reform and modernisation – simplifying and modernising the legislative and administrative framework
Broadly, HMRC want to make use of technological advances (as above) and create a more streamlined, joined up service within HMRC. In addition, they want to reduce the time taxpayers need to spend managing their tax affairs so that they can focus on business and growth.
Some examples of steps taken so far:
- HMRC have increased the Income Tax Self Assessment trading income reporting threshold from £1,000 to £3,000. This means that taxpayers who earn between £1,000 and £3,000 from their trade will not need to file self assessments and can instead report their income through a new digital reporting service (to be announced later this year).
- Changing the way that taxable benefits are reported by employers such that income tax and national insurance can be paid in real time rather than reported via a P11D which results in tax being collected in arrears and adjustments to tax codes.
Conclusion
We think that some of these announcements are positive steps in the right direction for HMRC. As advisers, we are looking forward to a more joined up and digital approach from HMRC so that we can help our clients more efficiently. Whilst it is fair to say that not all advisers operate to high standards, we would respectfully say the same can be said of HMRC officers. We hope that the increased investment in training HMRC officers will improve the experience of agents and taxpayer dealing with HMRC directly.
As a result of this roadmap, we are expecting HMRC to open more enquiries and investigations into taxpayers given that information will be more readily available for them to do so. Therefore, it is more important now than ever to ensure that your tax affairs are correct and up to date.
If you would like to discuss any matters arising from the issues covered in this article please contact Menzies’ Tax Disputes and Disclosure or on the free confidential hotline below.
Contact Our Experts
