HMRC customer service 'worse than abysmal'

Customer service by the UK’s tax authority has plunged to a level that was described yesterday by MPs as ‘worse than abysmal’.

Seeming to struggle to sum up the growing and multiple failures of HM Revenue & Customs, the MPs said its customer service was “so bad” that tax collection could now be at risk.

Up to 12million calls to HMRC in 2015’s first six months (half the total) went unanswered; data on losses via avoidance is absent and the prosecution rate on evasion is “woefully inadequate.”   

Also, too many avoidance schemes still “run rings around the taxman;” he doesn’t effectively deter offshore evaders and his public reporting of revenue is “complicated and confusing.”

A report by the MPs also says that, despite already being given recommendations on how to address its shortcomings, the Revenue is currently unable to indicate how it plans to improve.

New “urgent recommendations” – 12 in total – have therefore been issued by the MPs, even though they acknowledge that some of their previous ones may have been ignored by HMRC.

Meg Hillier, chair of the panel which the MPs sit on, the Public Accounts Committee, said: “HMRC must rapidly improve its customer service, previously described by the PAC as abysmal and now even worse – to the extent it could be considered a genuine threat to tax collection.

“It beggars belief that, having made disappointing progress on tax evasion and avoidance, the taxman also seems incapable of running a satisfactory service for people trying to pay their fair share.”

Where HMRC is failing - at-a-glance:

Avoidance

• HMRC does not report on the scale of aggressive tax avoidance, which means parliament cannot assess whether tax law is working as intended.

• HMRC has failed to adopt (or even act on) the PAC’s 2013 recommendation that it should gather intelligence about the value of tax lost through aggressive tax avoidance schemes.

Offshore Evasion

• HMRC investigations into offshore tax evaders do not lead to sufficient criminal prosecutions (a “woefully inadequate” number) to provide an effective deterrent.

• HMRC has failed to prosecute more than one person from a list (leaked from HSBC) of 3,600 potential UK tax evaders.

Helplines & Customer Service

• HMRC is still failing to provide an acceptable service to customers and is unable to say when it will be able to do so.

• HMRC has decreased its phone responsiveness as it answered 74% of calls during 2011-12, compared with 72% of calls in 2014-15, and just 50% of calls in 2015’s first six months.

• HMRC has not provided any indication of when or by how much its customer service would improve, beyond a vague aim to improve year-on-year.

• HMRC acknowledges that people are more likely to pay the right tax when they find HMRC easy to deal with, but, in the words of its own chief executive Lin Homer, “we are still struggling”.

Not everyone accepts the MPs’ criticisms. The Chartered Institute of Taxation pointed out that it “does not necessarily follow that poor customer service harms HMRC’s ability to collect taxes.”

The CIOT added: “Compliance is high and we understand high against appropriate international comparisons – surely the overall level of tax collected is the test of performance.”

HMRC agrees. Reflecting on the MPs’ report yesterday, the department said it was “disappointed” that the PAC had “overlooked HMRC’s record results.”

Despite the Revenue’s criticism, the report states: “We recognise the achievement of HM Revenue & Customs in increasing the amount of tax collected while also reducing its running costs over the last 5 years.”

The committee then explained that HMRC collected £517.7billion from UK taxpayers in 2014-15, some £11.9bn more than in 2013-14.

Total tax revenue has also increased in each of the past five years, during which HMRC reduced its running costs from £3.4bn to £3.1bn.

The MPs reflected: “HMRC has thereby improved its ratio of revenue collected per £1 of administrative expenditure from £138.14 in 2010-11 to £166.95 in 2014-15

“[And] in 2014-15, HMRC also reduced tax losses (mainly the amount of tax written off because there is no practical way to collect it) and the balance of tax debt”.

The PCS union blamed the problems at HMRC on 11,000 full-time equivalent posts being axed since 2010.

“It has been abundantly clear for years that the department has cut too many staff and that services are suffering,” said PCS general secretary Mark Serwotka.

The charity LITRG agreed, saying “just being loudly critical” of the tax department would not address the real problem, “which is that HMRC is being required to do too much with too little.”

Nonetheless, the Revenue “doubtless deserves censure for delivering such poor customer service,” according to LITRG chair Anthony Thomas.

He explained: “HMRC’s Your Charter promises that HMRC will ‘do all we can to keep the costs of dealing with us as low as possible’.  

“HMRC’s failure to answer half of all telephone calls in the first six months of 2015, or to answer those who did succeed in getting through within a reasonable time, is arguably a breach of that commitment.”

Mr Thomas warned that taxpayers face an ‘anxious” wait to see if the Revenue will cope in April 2016, when a glut of tax reforms - to tax credits, dividends, expenses and IR35 – are scheduled to take effect.

In the meantime, “HMRC must do more to ensure all due tax is paid” urged PAC chair Meg Hillier. “The public purse is missing out and taxpayers expect and deserve better.”