Testing Real-Time Tax Calculation Through Automated Income Tax Self Assessment

His Majesty's Revenue and Customs (HMRC) seeks to modernize the UK tax system through innovation. This Proof of Concept (PoC) will explore how payment systems, banking, and fintech capabilities could simplify and automate tax for individuals and businesses. The opportunity involves developing and testing a working model that automatically captures transaction data, transfers it to accounting software, calculates tax liabilities in near real-time, and submits information to HMRC via existing systems. The PoC will demonstrate improvements in transaction categorization, reduce common errors, and test integration across multiple income and expense streams. Key deliverables include: a functional technical demonstrator built in a sandbox environment using realistic synthetic data for defined personas; an evaluation plan with impact metrics; and comprehensive documentation of end-to-end feasibility, design, and operational details. The procurement is structured in three phases: (1) Preparation (8 weeks) – synthetic data generation and system design; (2) Build (12 weeks) – development of the working model through design sprints; (3) Test and Evaluation (12 weeks) – testing against agreed metrics and producing evaluation reports with scalability recommendations. This is a discovery and learning exercise focused on structured testing. It does not commit HMRC to implementing any specific solution or live service. Successful outcomes should demonstrate tax system simplification, upstream compliance, improved customer financial clarity, and seamless business systems integration.