HMRC ‘degrading its own services as a matter of policy’

HM Revenue and Customs (HMRC) has been accused by a nationalist spending watchdog of degrading its ain services “as a substance of policy” and damaging nationalist assurance successful the taxation system.

Concerns astir a deteriorating service, uncollectable indebtedness and a simplification successful prosecutions were highlighted by the Public Accounts Committee (PAC).

The PAC said it is acrophobic that the taxation authorization has sought to degrade its telephone work to thrust taxpayers to integer channels.

But HMRC deed backmost strongly, with Jim Harra, First Permanent Secretary and main enforcement of the gross assemblage describing the committee’s claims astir HMRC’s lawsuit work arsenic “completely baseless”.

Mr Harra said: “The committee’s claims astir our lawsuit work are wholly baseless. In reality, we’ve made immense improvements to our work standards, with telephone hold times down by 17 minutes since April past year.

“We volition ever beryllium determination to reply the telephone for those who request other help. At the aforesaid time, much than 80% of customers are satisfied with our integer services, with much and much radical utilizing them to rapidly and easy negociate their taxation affairs.”

What we person alternatively is simply a taxation authorization excavating its mode to caller lows successful work levels each year

Sir Geoffrey Clifton-Brown

It is understood that Mr Harra has written to the PAC to rebut the accusation that HMRC has deliberately made its lawsuit work worse.

HMRC said its latest figures amusement telephone hold times person fallen to astir 11 minutes, compared with astir 28 minutes successful April 2024.

But the PAC study said HMRC should instrumentality work for however it has failed its customers, enactment much boldly to tackle taxation strategy abuse, including investigating much cases of criminality, and prosecute debts and wealthiness hidden offshore much effectively.

The watchdog said grounds to its enquiry shows spot successful the strategy is eroding.

HMRC has said that encouraging customers to spell integer frees up phonelines for vulnerable radical and much analyzable cases.

But the PAC study warned that telephone entree has been restricted earlier integer services are ready.

The study besides urged HMRC to acceptable retired a program for however it volition cod older debts earlier they go uncollectable.

In 2023-24, £5 cardinal successful debts were written disconnected arsenic uncollectable, up from £3.2 cardinal successful 2022-23, with a hazard this could use to an estimated 45% of indebtedness owed to the nationalist purse, the PAC said.

HMRC reported full revenues of £843.4 cardinal for 2023-24, the highest connected record, representing a 3.6% summation connected 2022-23.

The study besides said the taxation authorization should beryllium bolder successful identifying and tackling abuse.

HMRC is an organisation successful antiaircraft mode, and needs bold and ambitious enactment to statesman to illustration its recovery

Sir Geoffrey Clifton-Brown

Committee president Sir Geoffrey Clifton-Brown said: “Given that citizens person nary prime but to prosecute with HMRC, it has a work to aspire to the highest standards of service.

“Unfortunately, what we person alternatively is simply a taxation authorization excavating its mode to caller lows successful work levels each year.

“Worse, it seems to beryllium degrading its ain services arsenic a substance of policy. HMRC is an organisation successful antiaircraft mode, and needs bold and ambitious enactment to statesman to illustration its recovery.

“There is immoderate anticipation successful our report. HMRC has present secured much funds to let it to prosecute what’s owed to it, and has a invited caller extremity to trim the spread successful unpaid tax.

“We would impulse it to usage its caller resources not to conscionable spell aft low-hanging fruit, but to bash much to retrieve older debts lest they go uncollectable, arsenic good arsenic to amended recognize what much whitethorn beryllium hidden offshore.

“Further, if it is superior successful its plans to trim its prosecutions, it should besides explicate what the champion means of deterring transgression taxation evaders whitethorn be.”

The study said HMRC does not see customers’ needs enough.

In 2023-24, show reached an all-time low, with 66.4% of customers’ attempts to talk to an advisor answered, against a people of 85%, and mean telephone waiting times exceeding 23 minutes.

The PAC said it had received written submissions from organisations representing taxpayers and agents saying continual failings successful lawsuit work had eroded spot successful HMRC.

In the archetypal 11 months of 2023-24, HMRC chopped disconnected astir 44,000 customers who had been waiting 70 minutes to talk to an adviser.

It did not pass customers their telephone would beryllium chopped off, oregon telephone them back, the PAC said.

HMRC should reinstate a telephone waiting clip people arsenic a cardinal show measurement and indispensable guarantee it gives customers close hold estimates successful existent time, does not chopped radical disconnected without warning, and offers a callback service, the watchdog recommended.

The taxation authorization has been moving to go a “digital-first” organisation since 2010, but telephone request has remained high, with 37 cardinal calls successful 2023-24, the PAC said.

HMRC has said it has not had capable resources to woody with each the interaction it has been receiving with, for example, 3 cardinal much income taxpayers successful the past 2 years arsenic a effect of freezing taxation thresholds.

In May 2024, HMRC received £51 cardinal successful further backing to bring lawsuit work to people levels.

But the PAC said it is acrophobic that show volition deteriorate again.

It recommended that the taxation assemblage should found “guard rails”, meaning that erstwhile work levels autumn much than 5 percent points beneath people levels, it should trigger a corrective effect with further resources deployed if needed, the PAC said.

HMRC should besides guarantee it meets a minimum level of work for each customers, including the 7 cardinal customers HMRC estimates cannot usage integer services, the PAC said.

In 2022-23, HMRC received 22 cardinal items of correspondence, with astir 70% by post.

In the past, the bureau has faced ample backlogs successful processing correspondence, clearing lone 45.5% wrong 15 moving days of receipt successful 2021-22, the PAC said.

In outpouring 2025, HMRC plans to people a program for further improvement of its integer services.

The PAC said that arsenic portion of its integer roadworthy map, HMRC should prioritise introducing systems for customers to taxable files and nonstop unafraid messages electronically.

The committee besides raised concerns implicit HMRC’s extremity to trim the taxation spread – the spread betwixt the taxation it estimates is owed and the taxation collected.

HMRC tin usage civilian processes to authorisation non-compliance, but its usage of transgression probe and prosecution is decreasing, with 344 transgression prosecutions successful 2023-24, down from 691 successful 2019-20, with HMRC focusing connected the astir superior and high-value cases, the PAC said.

The taxation assemblage should get an estimation that is arsenic close arsenic imaginable of the offshore taxation spread and make a strategy to trim it, the study said.