Public Accounts Committee slate Revenue’s underachieving
In March 2013 the PAC denounced HMRC’s customer service record as “abysmal”, having only answered 74% of telephone calls received by its contact centres during 2011-12. It didn’t improve with time as in 2014-15 the Revenue only responded to 72.5% of calls. To make matters worse, over the first half of 2015 response time had dipped considerably to 50%.
That Committee deemed HMRC’s target of answering 80% of telephone calls within 5 minutes as “woefully inadequate and unambitious” and recommended that the department should set a more challenging short term target for call waiting times and a long term target that is much closer to industry standards. HMRC, however, have consistently refused to set more demanding targets and in 2014-15 answered only 39% of calls within 5 minutes.
That customer service levels are so bad concerns the PAC that this is having an adverse impact on the collection of taxes. HMRC recognise and have acknowledged that people are more likely to pay the right tax when they find the Revenue easy to deal with but have told the PAC that they do not believe the overall trend in its customer service was worsening.
On an annual basis HMRC receives around 60 million calls, with the busiest times falling around the key deadlines such as 31st January for Self Assessment and 31st July for tax credits renewals. In a bid to cope with this high volume and improve its woeful customer service, HMRC announced in June that they would dedicate £45 million of its budget to enable 3,000 extra staff to be recruited to its customer service teams. This action however has not pacified the PAC who have recommended that the department should identify what impact its poor level of service is having on tax revenues and produce a detailed plan setting out how and when it will provide an acceptable standard of customer service.
Tax Avoidance
Criticism wasn’t just reserved for HMRC’s failing customer service however, as the PAC were also unhappy about aspects of the department’s work in the field of tax avoidance.
Previously the PAC had recommended that, from December 2013, HMRC should gather intelligence about the value of tax lost through aggressive tax avoidance schemes but this was disregarded by the department who argued that tracking such avoidance activity was impossible.
The PAC has therefore suggested that HMRC should identify and report the value of all tax avoidance schemes to enable Parliament to assess whether tax law is working as intended. HMRC have however fought back by saying, “We routinely publish the number of tax avoidance schemes, which show a steady decline as a result of tough government action. We brought in more than £1 billion from the first year of applying accelerated payments to avoidance cases and have closed many loopholes and secured tough new enforcement powers.”
Criminal prosecutions for offshore tax evasion is still “woefully inadequate”, says the PAC who point to the fact that there have only been 11 prosecutions since 2010. They are baying for blood and want the Revenue to strengthen its capability to investigate offshore tax evasion and make tougher the criminal and civil sanctions it can apply.
Public reporting of additional tax revenue
HMRC’s reporting of the additional tax revenue it generates from its compliance work is not to the PAC’s liking either. The Committee say it remains unnecessarily complicated and confusing. When people read the Revenue’s Annual Report they would assume that the type of compliance yield it calls “cash collected” is cash actually received, but this is not the case. “Cash collected” includes cash not yet received and some of that may never be collected. The PAC therefore wants the department to report its compliance yield in much clearer and simpler terms.
Meg Hillier, Labour/Co-op MP for Hackney South and Shoreditch, and also chair of the PAC, said, “It beggars belief that, having made disappointing progress on tax evasion and avoidance, the taxman seems incapable of running a satisfactory service for people trying to pay their fair share.”
Whilst HMRC can point to staff reductions over recent years that have inevitably impacted on the department’s efficiency, it cannot allow customer services to continually deteriorate. Many people have little confidence in the department as it is, so if matters do not improve HMRC will lose any credibility it still has.
What do they expect when the staff at HMRC have been so severely cut? It was never the most efficient service but removing experienced staff has not made it any better or more efficient. That’s why they go after easy targets like the self-employed instead of taking on multinationals and non-coms.