HMRC customer service plummets to 'all-time low' and taxpayers are fed up, say MPs

Customer service at the tax office has fallen to an all-time low as taxpayers face  increasing delays.

HMRC’s service levels have continued to deteriorate over the past year, a report by the Public Accounts Committee published today says.

It took on average 16 minutes 24 seconds in 2022-23 for an adviser to answer the phone, up from 12 minutes 22 seconds the financial year before. in 2021-22.

Taxpayers are waiting even longer to speak to an HMRC adviser, say MPs

In 2022-23, 62.7 per cent of callers waited more than 10 minutes to speak to an adviser, up from 46.3 per cent in 2021-22.

Higher demand for HMRC services is in large part due to the increased number of people paying tax due to fiscal drag.

HMRC told the PAC’s inquiry that it did not have the resources to meet rising demand for its phone and postal services at expected standards.

It has set itself a target to reduce incoming phone and post contact by 30 per cent by 2024-25 compared to 2021-22.

It says that if it can achieve this reduction it should have the resources to meet its service standards.

However, HMRC has already drawn criticism from accountants and business owners who have struggled with the transition.

Last summer the tax office announced it was closing its self-assessment helpline for three months to trial directing queries from the helpline to the department’s digital services.

In December, HMRC shut its phones again ahead of the 31 January self-assessment deadline.

This Is Money has written extensively about HMRC delays and the impact of the closure of both the self-assessment and VAT registration helplines.

The committee said it had received an ‘unprecedented’ number of submissions about the tax office’s performance, ‘demonstrating the extent of taxpayers’ exasperation over the quality of services and the impact on businesses’.

A number of submissions pointed to the deteriorating customer services and increased delays as a key issue affected businesses.

The PAC has called on the Treasury and HMRC to make sure the department is ‘sufficiently resourced in the short as well as the longer-term’ in order to meet its service standards.

While headcount cuts have done little to help resourcing, insiders have told This is Money that it is staff retention and lack of training at the root of HMRC’s issues.

HMRC is ‘struggling to cope’

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The rise in the taxpayer population and the complexity of tax affairs means HMRC is ‘struggling to cope’, according to the report.

Tax revenues were at a record high of £814billion in 2022-23, but the department still fell £2billion short of its £36billion target for compliance yield, which is the additional revenue that would otherwise have been lost were it not for HMRC’s intervention.

The PAC’s report also found a significant reduction in criminal prosecutions by HMRC, from 691 in 2019-20 to 240 in 2022-23.

HMRC says it is ‘increasingly selective’ when it comes to seeking prosecution, in part due to the backlogs in the justice system, but the PAC is concerned it sends the wrong message.

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.’