This article was first published in the February 2016 UK edition of Accounting and Business magazine.

Come 2020 it is certain that Ruth is going to be busy. ‘Ask Ruth’ is the taxman’s virtual assistant and will be on hand 24 hours a day to guide taxpayers through the HMRC Making Tax Digital vision. The government’s ambition, says David Gauke, financial secretary to the Treasury, is to ‘transform tax administration so it is more effective, more efficient and easier for taxpayers’.

The dream of civil servants and politicians is that digital tax will have three key benefits: no unnecessary form-filling, with HMRC promising never to ask for information it already knows; a real-time system, so missed deadlines, penalties, debts and ongoing errors become less of a risk; and digital accounts for taxpayers, which should mean the end of annual tax returns (see also page 30).

It’s the online equivalent of self-service checkouts at supermarkets – but with no cashier-staffed checkouts if you run into trouble. In this world, if you aren’t online, you aren’t in business.

HMRC is promising some consultation on these reforms, which aim to help it bring tax in more quickly and complete the job of making information collection and tax calculation the job of taxpayers and their advisers, thus saving the government money. HMRC’s recent spending review projected that the £1.3bn investment announced in the 2015 Autumn Statement will generate an extra £1bn in tax revenue by 2020/21 as well as sustainable efficiencies thanks to ‘a headline 21% reduction in baseline resource costs, delivered through digitisation of tax collection and a smaller but more highly skilled workforce’.  

The quarterly update – which appears to be non-negotiable – has echoes of VAT quarterly returns, but producing tax accounts and computations four times a year is in a different league. Businesses of all sizes – but particularly small businesses – have to squeeze compliance work around actually running the business and creating the economic activity that can be taxed. This seems to be a point that neither politicians nor civil servants can grasp – there’s a lot more to producing accounts than just making sure the Excel spreadsheet adds up correctly. This raises one crucial question, which lacks any sort of answer at the moment: after this system is up and running, what will be the role of accountancy firms in providing tax services to their traditional client base?

The other key unknown is technology. HMRC promises it will provide free apps and software that link securely to its systems and offer help to those who need it. It’s a promise HMRC must be made to keep. At the launch of personal tax accounts (PTAs) last year, HMRC likened the move to online banking. But even though online banking has been transformative, it isn’t perfect, with its outages and inability to give account holders access to their accounts at times. And let’s face it, banking isn’t as complicated as tax. HMRC’s track record on technology is flaky at best. Any taxpayer who uses its Basic PAYE Tools knows it is simply not good enough; the software is crude, with HMRC apparently having no appetite to improve it. 

In HMRC’s illustrative examples of how the digital future will work, happy taxpayers update their information via a third-party app – which they are paying for, presumably – on their smartphones. The suggestion is that it’s as easy as checking the football scores. 

Taxpayers need professional bodies such as ACCA and software associations to help them survive the move to digital and to make HMRC see sense. Neither the taxman nor the taxpayer is going to get through this revolution on their own. 

Peter Williams is an accountant and journalist