HMRC service standards hit ‘all-time low’

HMRC service standards hit ‘all-time low’

Feb 29, 2024

Taxpayers are exasperated with the declining level of HMRC service with response levels rapidly deteriorating for five years in a row, leaving MPs ‘disappointed’

The latest report into HMRC performance released by the Public Accounts Committee (PAC) paints a dismal picture of declining service standards, described as reaching an ‘all-time low’, with long waits on phone lines where they have not been cut, a rising number of taxpayers with complex issues, and HMRC’s insistence that taxpayers use the website to resolve their problems.

MPs also said that HMRC and Treasury have made a ‘conscious choice‘ to reduce the amount of telephone support and advisers on the lines, despite demand rising by 10% and taxpayers facing increasingly complex tax scenarios which they are unable to resolve online.

MPs said this was the fifth consecutive year of decline with 63% of callers waiting more than 10 minutes to speak to an adviser in 2022-23, up from less than half at 46% the previous year.

HMRC told the PAC’s inquiry that it did not have the resources to meet rising demand for its phone and post services at expected standards. It instead is directing callers to use digital services which it insists are good quality. The PAC received a lot of evidence to the contrary from taxpayers and their agents.

‘HMRC is too keen to point to the long road to digitisation as an excuse for poor services to customers now,’ the report stated. ‘HMRC must ensure it maintains sufficient accessibility in the system for people to raise concerns and have these dealt with in a timely manner.’

With a twin rise in the taxpayer population and the complexity of people’s tax affairs, the PAC stated in the report that HMRC is ‘apparently struggling to cope’. At £814bn in 2022-23, tax revenues are at a record high, but HMRC still fell £2bn short of its £36bn target for compliance yield and expects to do so again in future years.

PAC set out six recommendations to HMRC to implement as a matter of urgency to improve the declining service standards, address fraud and tax evasion by closing the tax gap, increasing the number of prosecutions and crack down on abuse of Companies House registrations by fraudsters using fake addresses belonging to innocent members of the public.

Top of the list is the urgent recommendation to address service quality, with the PAC report calling on the Treasury and HMRC to ‘ensure HMRC’s customer services are sufficiently resourced in the short as well as the longer-term so that it can meet its service standards until its digital services adequately address the needs of taxpayers and their agents’.

It also warned HMRC to stop taking aggressive action over trivial debts, stating that ‘we have heard about cases where taxpayers are being pursued repeatedly for often trivial amounts. While HMRC should make every effort to recover its debts, this should be proportionate to the size of the debt and the circumstances of the taxpayer. We are not convinced that customers have an easily accessible and responsive route via which they can raise concerns about HMRC’s debt collection activities’.

Dame Meg Hillier MP, chair of the Committee, said: ‘Almost eight years have passed since our Committee challenged HMRC over its telephone lines’ holding message being one of the most streamed pieces of music in the country. Our latest report into its performance sadly illustrates a continued tale of decline in its services.

‘Our report also poses serious questions as to whether HMRC is getting the balance right between its civil and criminal prosecutions. Our findings show a steep drop in the latter at the same time as we see HMRC going to great lengths to challenge people in court over their employment status.

‘Our Committee has heard the frustration felt by the many taxpayers and organisations who provided evidence to our inquiry loud and clear. HMRC would be well-advised to do the same.’

The report also considered the impact of IR35 legislation and was critical of HMRC’s treatment of contractors who make mistakes, saying that their attitude risked ‘deterring legitimate economic activity, and that a lack of confidence in how to apply the rules, together with HMRC’s tough approach when taxpayers make mistakes, is unnecessarily putting companies off using contractors’.

Over the last year, there has also been a significant reduction in criminal prosecutions by HMRC, from 691 in 2019-20 to 240 in 2022-23. HMRC told MPs on the committee that it is ‘increasingly selective in using its criminal investigation powers and seeking prosecution (in part due to backlogs in the criminal justice system)’, but the PAC is concerned that ‘if fewer criminals are prosecuted this sends the wrong message’.