Action 6 case study: encouraging third parties to develop services on top of our APIs
Published 24 March 2014
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How HMRC opened up tax services to third parties
Phil Pavitt talks about HMRC鈥檚 efforts to update and modernise its services
Few people can honestly say that they like paying taxes, but the process of submitting a tax return has become much easier in recent years, thanks to efforts by HM Revenue and Customs (HMRC) to update and modernise its services.
Key to that modernisation was a pragmatic decision to open up the tax service as a set of APIs, digital connections to the raw data which can be accessed by third party software developers.
HMRC Director General Phil Pavitt says that this opening up was crucial to the success of online tax returns, because it enabled people and businesses to use the accounting software they were accustomed to. That sounds like a small thing, but it makes a huge difference.
Phil explains how this was done:
Over the years we鈥檝e suffered from something other parts of government have suffered before, and that is we try to invent everything for ourselves
We created free software to enable people to interact with us But we couldn鈥檛 keep up with what people actually wanted. The market demanded access to APIs. We started to give it away and found the market thrived on it. The payroll industry took it way beyond anything we鈥檝e ever done.
Everybody benefited from this approach. Businesses found it easier and quicker to submit tax returns. Third party software companies sold more products. And HMRC built a better relationship with the payroll industry, and got valuable market information in return.
It鈥檚 a very powerful joint approach.
Despite the success to date, there鈥檚 still room for improvement, he adds. For example, the digital Self Assessment system was originally built as an electronic copy of a paper-based service.
We just took old practices and digitised them, but you still can鈥檛 pay online.
Work is underway to build a replacement system from scratch, one designed with digital service in mind from the outset.
What we鈥檙e working on now is re-designing everything from end to end. It鈥檚 a major breakthrough. Customers can have one relationship with us, covering all their tax affairs. That鈥檚 what the prize is, and that鈥檚 what we鈥檙e aiming for in the next two or three years.
In the financial year ending 2012, 80% of Self Assessment tax returns were filed online. None of this success would have been possible without that first important step of opening up the data to the world.
The lessons are simple, says Phil:
Learn from each other. Shorten the journey. Start with the customer.
Phil Pavitt is Director General of HMRC.