National Audit Office report finds failures have caused “frustration and distress” for taxpayers
The National Audit Office (NAO) has published a report into HMRC’s service levels, with taxpayers having spent the equivalent of 798 years on hold when calling the tax office.
Its report follows similar criticism levied at the tax office by the Public Accounts Committee earlier this year, with the NAO finding that “HMRC’s delays in responding to queries have caused frustration and distress” to taxpayers.
Highlighting the extent of HMRC’s declining service levels, the report revealed:
- Call waiting times have increased almost fivefold, from 5 minutes in 2019/19 to 23 minutes in 2023/24
- Advisers are answering fewer calls, with just 20.5m answered in 2022/23 from 38m attempts
- Correspondence handling has been below target levels since 2019/20
The report also noted that poor service levels could be “making it more difficult to comply” with tax obligations, leading to increased non-compliance risks.
These fears are mirrored by “professional accountancy and tax bodies”, which have also voiced concerns over “the deterioration in HMRC’s customer service performance”.
HMRC’s digital roadmap questioned
Another key finding is that HMRC’s strategy of shifting towards digital self-servicing routes is not proving effective.
HMRC has sought to direct customers to digital services for simple enquiries for several years, both to cut the costs of servicing its telephone services to “free up staff to serve people who need extra support”.
However, the NAO found the push towards digital self-servicing has “not reduced service pressures as much as HMRC expected”, and nor does HMRC “have a good understanding of the cost and benefits of its digital services”.
The report also reveals that around 72% of the calls HMRC received in 2023/24 were the result of “failure demand”.
This means calls were “caused by HMRC’s processes failures or delays, customers chasing progress and customers’ errors”; in other words, HMRC’s digital services may actually be driving higher call volumes.
While the use of HMRC’s digital services is growing, the NAO concludes that “it is not clear how far and fast digital will reduce demand for telephone and correspondence services”.
Tax office stuck in “declining spiral”
Speaking following the report’s publication, Gareth Davies – head of the NAO – said the findings were evidence of worsening service levels at HMRC, which have become more pronounced in the last five years.
“HMRC’s telephone and correspondence services have been below its target service levels for too long”, Davies said. “While many of its digital services work well, they have not made enough of a difference to customers”.
With call wait times increasing, and HMRC unable to meet demand, taxpayers “have been caught in a declining spiral of service pressures and cuts”, Davies said.
These problems have been worsened by the fact that HMRC “has also not achieved planned efficiencies”, including through reducing headcount. But higher call volumes have also meant HMRC has been unable to make these planned staff reductions, leaving the tax office under greater pressure to cut staff in 2024/25.
However, the NAO chief called on HMRC to improve its customer service standards “before adjusting staffing levels,” to ensure taxpayers receive acceptable levels of service. Similarly, Davies said HMRC “must allow more time” for taxpayer use of its digital services “to bed in”, rather than making it the only viable option for customer enquiries.
So Making Tax Digital is costing more to implement than envisaged and delivering fewer benefits than planned.
They cannot say they were not warned.