HM Revenue and Customs Chief Digital and Information Officer Mike Potter has a three-pronged approach to his digital strategy at the UK tax collection agency: enhance the use of technology, change the user experience, and attract the best talent.

And HMRC's 50 million customers are already reaping the benefits according to Potter. The department has completed more than two million webchats, 3.2 million virtual assistant interactions, more than one million Voice ID enrolments, and answered 40,000 queries on social media.

"Our whole approach has been based on test and learn, provide it, celebrate but you need to find people who are going to work with you on that, and then you iterate your way into the strategy, though delivering and transparently shaping services," Potter said last month at the Public Sector Show in London's ExCel.

"What you then find is the policies follow, because actually it's very demonstrative work. What needs to be true to make it work at scale is changing policy."

One such major policy followed in 2015, when then-chancellor George Osborne announced "the death of the annual tax return", and its rebirth as a self-assessment tax form in comprehensive digital accounts. It was up to HMRC to build something that could make that possible.

Digital security and Voice ID

That December HMRC launched digital personal tax accounts with an initial trial run of 3,000 users. It has since expanded to more than 10 million customers.

In January 2017 the department made another major launch when it rolled out of Voice ID, a biometrics service designed to expedite telephone security verification. Two million people had registered with the service by July, which will soon be extended across HMRC's digital services to make the customer's voice a full user interface.

"They get through all their tedious authentication much more quickly," says Potter. "The experience is better, it's helping to reduce waiting times on the phone, but more importantly for us, it keeps you secure."

The department also released a new app in April that lets customers renew tax credits at the click of a button instead of going through pages of documents or waiting for hours on the end of a phone line. Within three months it had been used by 23,000 people.

Potter also revealed that the HMRC will soon be embarking artificial intelligence trials.

He believes AI has enormous potential, but before that can be realised customers must digitise their business and information.

HMRC is embarking on a major digitisation drive of its own in an effort to go paperless using tools such as robotic automation to gather data and make it easier for advisors to serve customers.

Potter refused to reveal what exactly the AI trials would explore but mentioned early automation use cases including directing queries to the right places without human intervention, augmenting decision-making on casework and self-service support for customers.

"It's about taking the grunt out of people's jobs and focusing them on high-value," says Potter. "If they don't believe in it they won't participate and it won't work."

Digital challenges at HMRC

Potter was named interim Chief Digtal and Information Officer at HMRC in August 2016, after predecessor Mark Dearnley left for a role in the private sector.

He was previously the department's digital transformation director for almost two years, and spent five years prior to that in business transformation services at NHS Blood and Transplant.

The digital infrastructure he is now responsible has to support an immense operation encompassing 60,000 staff collecting more than £500 billion in revenue and two billion transactions from 45 million individual customers and 5 million business customers.

Potter says that for every seven days of work that is done at the Post Office, one of them is dedicated for serving HMRC.

The Whitehall department also has one of the largest IT estates in Europe, with 600 separate systems, 500 terabytes of data, 5,000 servers and 24/7 operations. HMRC is finally taking full control of its estate with the phased replacement of the £10 billion 'Aspire' outsourcing contract for IT services which has underpinned its services for the last decade.

"We're going to design and deliver fundamentally different and better technology services and new customer experiences," said Potter.

"We're also changing the market and the relationship with the technology providers, because the one we had served us well, but it isn't fit for the future, we need a new one."

HMRC APIs

HMRC has an ever-growing stock of APIs, which allows third party software, businesses and individuals to use to interact with HMRC and improve tax-related digital services.

They're currently working with a community of developers to develop tax management products and have already released 18 production APIs, which 23 products are currently using.

"We have 700 registered software developers, and many of them now are building products using the initial set of interfaces. We're going to have over 400 interfaces.

"So anything you can do as a customer, you've got to do through your accounting software directly with HMRC. It's a complete transformation in the way business work with us."

The HMRC tech team has scaled at such a speed that the civil service recruits have had to be augmented by external contractors. To make staffing more sustainable in future, Potter wants to recruit 400 digital technology apprentices by the end of this year, the culmination of an ambition that began with 20 apprentices just two years ago.

There will still be a place at HMRC for third-party suppliers and their specialist skills and technologies, but only in cases where they are better provided externally and where they can add their specialist innovation rather than running entire services.

Flexible working

To attract the best tech talent his team is also building a more attractive workplace.

They're consolidating all of their staff into a small number of shared locations and equipping them with dual screens, modern smartphones, fast networks, Surface Pros, softphones and ubiquitous WiFi, and state-of-the-art collaboration tools.

Customers now receive around-the-clock services through a combination of tech innovation and changing working practices.

Last January HMRC extended opening hours on webchat to give customer 24/7 access to services, and advisors are often now given the option to work from home.

"They were more productive unsupervised at home, than they were in the building," says Potter.

"We want empowered staff working in a way that suits them, not chained to a desk."

His objective is to encourage staff to seek solutions independently and then scale the successful ones rapidly celebrating every milestone and creating a positive culture.

"I try not to commit to timescales, because you don't know what's going to work. What we did do is try and commit to these key business events."

HMRC has two major events a year: tax credits renewals and self-assessment tax returns. It tends to organise its innovation around these windows, typically beginning work on them fourth months before they take place.

Changing strategy

Potter has changed his strategy for communicating the benefits of technology and convincing staff to embrace change since he began his career at HMRC in 2014. Attracting their support was crucial to the successful roll-out of webchat.

"When I joined the organisation I thought we could sell big picture visions, supported by compelling analysis of data, comparing and contrasting how other organisations worked," he said.

"None of that worked at all. What was most powerful was actually doing it, so just proving it on s small scale and then expanding it, building on the evidence that we created and the energy and momentum.

"To do that you need co-conspirators in the organisation, and I thankfully found enough of them to be able to say why not introduce webchat?

"They loved using it because they thought it would serve the customers better, it was more efficient and users loved it and they decided to give them to get 200 people on webchat, now they've got 4,000."

Potter also wants to transform data sharing across government. If the current data silos were better joined up it would, for example, allow the NHS to notify HMRC when a child is born to more efficiently make arrangements around child benefit and tax credits.

"You have to interact with so many different agencies; it makes it fundamentally very hard for many people," he said.

"Unless we join up government for citizens and businesses and they only do things once, with government, we are never going to succeed. To do that we have to break up the barriers that are there for data sharing."