HMRC warned again on poor customer service
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MPs and tax experts have demanded a “radical” improvement to the UK tax authority’s customer service and more money for the under-pressure department, after a damning report by the spending watchdog concluded it was failing the public.
On Wednesday, the National Audit Office said HM Revenue & Customs’ customer service was in a “declining spiral” and calculated that taxpayers spent 7mn hours, or 798 years, on hold to HMRC in 2022-23.
It blamed funding pressures, job cuts — customer service staff numbers dropped 9 per cent between 2019-20 and 2023-24 — and a push to reduce costs by encouraging people to manage their tax affairs online as factors for HMRC’s worsening performance.
HMRC spent £881mn on customer service in 2022-23, a 6 per cent real-terms cut since 2019-20. It had been asked by the Treasury to make further savings cuts of £149mn a year and was planning a 14 per cent reduction in customer service numbers in 2024-25, the NAO said.
On Monday, the government promised an additional £51mn funding for HMRC to improve its customer service. However, some tax commentators said that this did not go far enough.
Richard Wild, head of tax technical at the Chartered Institute of Taxation, said the NAO had shown the extent of the funding cuts that had been imposed on HMRC — at a time when the number of taxpayers had increased.
“With the [NAO] report suggesting HMRC customer services have been told to find at least £116mn of new savings during the 2024-25 tax year, this week’s £51mn funding injection, while welcome, amounts to no more than slowing the pace of the cuts and tempering their short-term impact,” he said.
“Helping willing taxpayers to be compliant is a vital part of HMRC’s job. Unless and until automated digital services can be radically improved HMRC must be provided with the resources to provide all year round, well-publicised help and advice to taxpayers from a human adviser over phone and web chat.”
Caroline Miskin, senior technical manager, digital taxation at the Institute of Chartered Accountants of England and Wales, said: “Things simply can’t continue as they are at HMRC without consequences for tax collection, and more inefficiency costs falling on taxpayers and agents.”
She added that while digitalisation was the way forward, HMRC needed to “significantly step up its digital offering” as currently this did not meet the needs of taxpayers and was not “reliable or comprehensive”. Phone and post contact methods also needed to be maintained during the transition to digital services, Miskin said.
“The additional funding announced on Monday should help to alleviate the current situation but it will be some months before the impact of that will be seen and it does not address the need to improve digital services,” she cautioned.
Robert Palmer, executive director at campaign group Tax Justice, said: “You can’t run government departments on a shoestring and expect them to function properly . . . Equipping HMRC with the budget and best tools available is essential for a modern tax authority that can hit customer service targets and collect tax effectively. It’s the least that taxpayers deserve.”
MPs on the Treasury select committee also backed the NAO’s report. Dame Harriett Baldwin, Conservative chair of the committee, said: “Unfortunately, the NAO’s findings come as no surprise.
“For a long time, the Treasury committee has been banging the drum for a more coherent communications plan from HMRC on their plans to move customers online. The committee broadly supports the department’s plans but they must take law-abiding taxpayers with them — and that simply hasn’t happened yet,” Baldwin said.
“While customer service standards on our phone lines are still not where we want them to be, we’re making strong progress in our efforts to improve our customer service,” said HMRC. “Millions more people used our highly rated online services last year — saving them waiting on the phone and freeing up our advisers to deal with those people who need extra support.”
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