HMRC launches a new API strategy

On 1st September 2015 HMRC released a new API strategy with the objective of strengthening their relationship with developers and offering more flexibility to third party tax software. Their new plan, which follows a digital strategy launched in late 2014, is aimed at improving compliance rates and cutting costs for HMRC.

This new strategy comes from the large number of complaints received by HMRC about the slowness and inefficiency of their own gov.uk processing services.

HMRC’s long-term objective is to become “a digital organisation” and to carry out all tax adviser transactions online by 2018; while it might seem a large amount, 92.7% of their 1.24bn transactions (counting online, post and phone) are already happening online.

They are planning to minimise costs by “help[ing] make third party software more attractive for customers and reduc[ing] the dependency on HMRC products and support”: in short, this means HMRC will try to shed as many operations as possible and eventually rely exclusively on third party software.

At the moment, HMRC offers APIs for 21 services, and most transactions already happen via third party software. They are looking to improve on this number and make even more information and architecture available to software developers.

HMRC’s endgame is to delegate all tax management to third party software: they announced just last month that they are looking to withdraw their free filing software and push all tax agents to move to commercial software by 2016.
If you are planning to make the switch to a completely digital tax management system, this is a good time to get on board: HMRC’s digitalisation is coming much faster than you would expect.