Last week the Financial Secretary to the Treasury announced £51 million in funding for HMRC to help deal with the pressures on phonelines and improve its declining service levels. More information on this is available in a Written Ministerial Statement. The announcement of this investment came just two days before the National Audit Office (“NAO”) published a highly critical report on HMRC customer service.
HMRC has made clear that the additional investment being made does not affect its strategy to become a digital first tax administration and it is therefore seeking cooperation and support on this journey from taxpayers and the Professional Bodies. As previously advised, the Institute will continue to monitor this and will be attending a bespoke meeting with HMRC later this month to discuss the way forward further.
In the meantime, we remind you that HMRC previously advised that even if additional funding was received, quarters one and two of 2024/25 are likely to see a further decline in services whilst HMRC plans the way forward
The NAO report reviewing HMRC services in 2022/23 concluded that HMRC’s telephone and correspondence services have been falling below the expected service levels for too long, and that HMRC has not achieved planned efficiencies.
“To achieve value for money HMRC must provide a timely and effective service for those needing help with their tax or benefits, even as it attempts to reduce costs.
Forecasting how far and fast digital services will reduce demand for telephone and correspondence is highly uncertain and, so far, digital services have not had the effect HMRC hoped for. While the total number of telephone calls has reduced, the total amount of time advisers are spending on each call has increased, meaning HMRC’s workload has reduced more slowly than reductions in call volumes.
In the face of funding pressures, HMRC has pressed on with attempts to reduce costs despite its poor performance. HMRC and customers have been caught in a declining spiral of service pressures and cuts.
HMRC has been unable to cope with telephone demand and consequently fallen short in processing correspondence and dealing with telephone calls according to procedures, creating further service pressures. HMRC felt it had no choice but to close phone lines to catch up and compel people to use digital services. It has had to reverse this approach in the face of stakeholder opposition.
HMRC now faces a significant challenge without increasing capacity. Its approach to cutting services as it introduces new digital solutions has been too aggressive. HMRC needs to allow more time for new services to bed in, understand the difference they make, and then make staff reductions when the benefits are demonstrated. Otherwise, services will continue to suffer, and unnecessary service pressures and contact will remain.
HMRC cannot be certain that tax revenue is not suffering as a result. There are opportunities to reduce unnecessary levels of contact and improve efficiency. HMRC must demonstrate it understands how to make these gains, and form more realistic plans for how to deliver these, while ensuring it maintains service levels.”
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