Online services cannot replace HMRC staff, say MPs

In a hard hitting report on HMRC’s performance, MPs have demanded urgent improvements to address unacceptable service standards

‘HMRC’s customer service performance has been declining for many years and is not acceptable to the taxpayers or agents it serves,’ the report by the Public Accounts Committee said.

‘We are unconvinced that HMRC’s plans to address this through moving more enquiries to digital channels will sustainably reduce demand or deal with the poor level of service quickly enough.

‘Taxpayers and their agents are still not receiving an acceptable level of customer service.’

In the last five years, HMRC has cut its customer service staff numbers by 6,000 from 25,500 to 19,500.

MPs raised concerns that ‘reduction in staff was premature and were effectively cuts rather than efficiency savings’.

HMRC said that it had achieved efficiencies, but that the additional pressure of responding to the pandemic meant that performance had suffered. Beyond what it has already planned, HMRC said it would be difficult to deliver any new efficiencies before 2024–25.

The PAC report said: ‘We do not consider that HMRC has the resources required to provide the level of service its customers need, or to maximise the tax revenues it collects, at a time when the public finances are under huge strain.

‘Improving customer service is set to become even more difficult as the current inflationary pressures squeeze taxpayer budgets and reduce HMRC’s own spending power.’

The average speed of answering calls to HMRC helplines was 12:22 minutes in 2021–22, compared to 6:39 minutes in 2019–20.

During the pandemic, HMRC’s performance in replying to post or handling calls fell significantly, partly because it did not have sufficient customer service staff to manage the pressures that the pandemic brought. During the pandemic a backlog of 3.3 million items of post built up.

There are also endemic problems with the HMRC call centre operation.

‘We were surprised to learn that at times in the past, HMRC has simply closed its telephone line when it could not cope with demand. It is not acceptable not to answer calls from people who are trying to pay the government money,’ MPs flagged.

HMRC’s plan for improving customer service is to continue digitalising the tax system, moving people away from phone and post onto online systems. Taxpayers report being more satisfied with HMRC’s digital services than its phone and post services.

However, MPs said they were not convinced that ‘the plans will sustainably reduce demand for traditional channels or deal with the unacceptable level of service that taxpayers and agents are currently suffering’.

The move to online services will not happen quickly and will not be appropriate for all circumstances or customers.

The committee asked HMRC to respond within three months setting out its plan to improve customer service to adequate levels as quickly as possible, including:

• the metrics HMRC will use to monitor its customer service performance, including metrics it needs to demonstrate it can answer calls and deal with post in a timely manner;

• the level of customer service taxpayers and their agents can expect to receive over the next three years against each of these performance metrics;

• how it will support customers who are unable to engage digitally or have a preference for post or telephone contact; and

• its contingency arrangements if its plans to reduce demand for traditional channels are unsuccessful or take longer to implement.

The report also criticised the scale of outstanding tax debt, totalling £48bn and stressed that HMRC needed to address this shortfall with tougher compliance activity.

Dame Meg Hillier MP, chair of the Committee, said: ‘The eye-watering £42bn now owed to HMRC in unpaid taxes would have filled a lot of this year’s infamous public spending black hole.

‘But the public purse will continue missing out on billions of desperately needed revenues as HMRC will only employ more staff to tackle compliance over the next few years – that’s not fast enough to dent the tax gap at a time of huge public sector spending pressures. Meanwhile taxpayers battle customer services that need improvement.’

The poor levels of service have been flagged by tax advisers and accountants for months, and urgent action is need to improvement response times.

Susan Ball, president of the Chartered Institute of Taxation (CIOT), said: ‘The Public Accounts Committee are right to be challenging HMRC on customer service levels. The delays that taxpayers and their advisers currently face are not acceptable.

‘Our members tell us every day of the delays they face getting answers and action from HMRC – and the impact this is having on businesses and individuals.

‘HMRC have 6,000 fewer customer service staff than five years ago. The government appear to have cut staff numbers anticipating efficiencies and time savings from digitalisation that have not yet arrived.

‘HMRC are also sending out fewer payslips and payment reminders than they used to, which could be leading to more attempts to contact HMRC to find out how much to pay and by when.

‘It is crazy that people trying to get help from HMRC on paying the right amount of tax find it so difficult to get through, especially when an estimated £3bn a year is lost to the Exchequer from non-deliberate taxpayer error.’

The MPs also cited a lack of progress on the rollout of single customer accounts. MPs are demanding a timeline from HMRC setting out when its single customer account will be ready and asked the tax authority to consider how it can bring the implementation forward.

Tax debt stands at £46.8bn, and HMRC warned MPs that this is likely to grow due to cost of living crisis. There are 851,000 taxpayers on Time to Pay arrangements, and the average length of the debt repayment period has increased from six to 14 months.

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