This article, "HMRC has deliberately made customer service worse, say MPs," originally appeared on AccountingWeb.com.
The public accounts committee (PAC) has raised concerns that HMRC has “sought to degrade its telephone service to drive taxpayers to digital channels”.
The group of MPs don’t pull any punches in their assessment of HMRC’s performance throughout the report. In one of its most blistering criticisms of the tax authority’s customer service record, the committee said: “HMRC’s treatment of taxpayers has damaged trust in the tax system.”
Slamming the performance of the tax authority, Sir Geoffrey Clifton-Brown, the Conservative MP and chair of committee, said: “Given that citizens have no choice but to engage with HMRC, it has a responsibility to aspire to the highest standards of service. Unfortunately, what we have instead is a tax authority excavating its way to new lows in service levels every year. Worse, it seems to be degrading its own services as a matter of policy.
He added that HMRC is in “defensive mode” and needs “bold and ambitious leadership to begin to chart its recovery”.
‘Damaged trust in the tax system’
The PAC report highlighted that HMRC is relying on its move to digital services to fix its customer services problems but, with the same problems persisting year after year, the group of MPs expressed doubts that HMRC’s digital services are “as good as HMRC claims”.
This damning conclusion comes after the PAC has tracked the decline of HMRC over the past six years, highlighting that only 66.4% of customers’ attempts to speak to an adviser were answered in 2023/24 and call times exceeded 23 minutes. Then, in the first 11 months of 2023-24, nearly 44,000 customers were cut off after being on hold for 70 minutes to speak to an adviser. The PAC said this was because HMRC’s system cannot cope with so many customers waiting in the call queue.
The report highlighted other examples of HMRC’s unacceptable service, including not providing a call-back option or accurate information on expected call times.
HMRC defends record
HMRC has strongly refuted the “unfounded” claims that it has deliberately made its services worse. Jim Harra, HMRC’s permanent secretary, said: “The committee’s claims about our customer service are completely baseless. In reality, we’ve made huge improvements to our service standards, with call wait times down by 17 minutes since April last year.
“We will always be there to answer the phone for those who need extra help. At the same time, more than 80% of customers are satisfied with our digital services, with more and more people using them to quickly and easily manage their tax affairs.”
Harra has sent a “robustly worded” letter to the PAC, which absolutely refutes the PAC’s claims.
HMRC further countered the PAC’s accusations by emphasising recent investment of over £1.6bn over the next five years to recruit 5,000 additional compliance staff and fund 1,800 debt management staff. HMRC also received a £272m investment over the next five years to close the tax gap and modernise their systems.
Recommendations and conclusions
The PAC report is a severely critical assessment of HMRC’s customer service – highlighting a deliberate degradation of phone lines – and paints a picture of the tax authority eroding trust in the tax system.
The PAC offered a range of recommendations for HMRC in order to bolster customers’ needs and collect older debts owed to it before they become uncollectable.
The PAC called on HMRC to reinstate call-waiting time targets as a key performance measure and ensure accurate estimates of wait times are provided. It concluded that HMRC “does not give enough consideration to the needs of customers” with regard to its telephone services.
The report also found that HMRC has been too willing to let telephone services fail in the hope that taxpayers would use digital services instead. The PAC pointed to examples such as HMRC estimations that 66% of calls could be handled online instead and restrictions made to phone lines before digital services are in place.
HMRC’s service levels faced further criticism after it planned to close a number of its phone lines. However, the tax authority reversed its decision 24 hours later following a backlash from the public and stakeholders.
As such, the PAC advised HMRC to meet a minimum level of service for all customers, while also understanding how far its digital services can replace telephone services.
HMRC has ambitions to be a digital-first organisation but the PAC noted that the push towards digital hasn’t reduced demand on the phone lines. HMRC has plans to publish a “digital roadmap” in the spring; however, the PAC has urged HMRC to still allocate sufficient resources to customer services now and in the future.
Speaking of the digital roadmap, the PAC pressed HMRC to prioritise systems for customers to provide files and send messages securely. This recommendation was prompted by 70% of correspondence still coming via the post, which has led to large backlogs due to the time-consuming process of scanning and manually entering the information into HMRC systems.
As the exchequer secretary to the Treasury, James Murray emphasised during his Treasury committee grilling last week that one of HMRC’s new goals is to reduce the tax gap. The aim of this measure, as set out in the Autumn Budget, is to bring in £6.5bn additional tax revenue by 2029/30.
However, the PAC has flagged that HMRC’s use of criminal investigation and prosecution has decreased. So it has called on HMRC to be “bolder in how it tackles abuse of the tax system”, pushing the tax authority to investigate more cases of criminality, bring prosecutions where appropriate and pursue debts owed and wealth hidden offshore.
Evidence from key stakeholders
The PAC also cited written evidence as further proof of the deterioration of the tax system. The Association of Tax Technicians, for example, noted that there are “significant gaps in HMRC’s digital services” and where those services do exist “agents do not always have access to the full range of digital services available to taxpayers”.
The Chartered Institute of Taxation also supported the use of digital tools but warned: “There remains a significant gap between both the actual availability and awareness of such tools, and what appears to be HMRC’s perceptions of what taxpayers (and their agents) can already do.”
Caroline Miskin, the Institute of Chartered Accountants in England and Wales senior technical manager for digital taxation, said the report delivers a “sobering message” for HMRC. Despite improvements after the tax authority received a £51m investment in May 2024, Miskin said that “HMRC’s telephone service is in a very poor state” and that while improved digital services are key, “they need significant investment and HMRC must ensure that traditional methods of communication are supported”.
Miskin found the PAC’s verdict that HMRC’s deliberate deterioration of its customer service has eroded trust in the tax system “worrying” and said it could have “significant consequences for tax collection”.