According to a new report by the National Audit Office (NAO), the number of telephone calls received by HM Revenue & Customs (HMRC) from customers was down from previous years. However, the report identifies a grave need for greater communication from the HMRC about its digital customer service offerings as customers cumulatively spent 798 years on hold in 2022-2023.
HMRC has been driving towards prioritising digital solutions to solve customer queries in the last few years. NAO has revealed that in theory, this would be very effective as it would cut costs servicing telephone calls and correspondence. It would also free up staff to serve people who need extra support. But in reality, many customers feel they have been left out to dry as they are unaware of the digital solutions being offered by HMRC.
The new strategy encouraging customers to use its digital services online is better suited for straightforward queries and reporting changes in customers’ circumstances. However, it is not clear how far and fast digital will reduce demand for telephone and correspondence services.
Customers experienced an average wait time of nearly 23 minutes in the first 11 months of 2023-24 (up from five minutes in 2018-19). HMRC is not expecting to meet its telephone performance target in 2024-25 either and has not made clear what level of service customers should expect.
Unaware of digital solutions
The UK tax collector has not yet done enough to raise awareness of its digital services, increase customers’ confidence in using its online offering or understand how effectively these services meet customers’ needs.
The move to digital service has not eased pressure on traditional services as much as HMRC expected. The quality of service provided by HMRC telephone and correspondence has been far below the levels expected in recent years and has not met annual targets.
Advisers are taking more time on average to answer calls and handle fewer calls than in 2019-20. Many avoidable customer calls are caused by HMRC itself for reasons including process failures and delays, and customers chasing progress.
While the total number of telephone calls has reduced, the total amount of time advisers are spending on each call has increased. This means HMRC’s workload has reduced more slowly than reductions in call volumes. More taxpayers hold multiple jobs, meaning they have less straightforward needs, while fiscal drag has also brought more people into the tax system.
Gareth Davies, head of the NAO
Gareth Davies, head of the NAO, said: “HMRC’s telephone and correspondence services have been below its target service levels for too long. While many of its digital services work well, they have not made enough of a difference to customers, some of whom have been caught in a declining spiral of service pressures and cuts.
“HMRC has also not achieved planned efficiencies. HMRC must allow more time for these services to bed in and understand the difference they make before adjusting staffing levels.”
Playing catchup
With HMRC’s call-handling workload falling less than expected, it has not been able to make all the staff reductions it planned. Due to budgetary constraints, it now needs to cut staff numbers by 14 per cent in 2024-25, despite only achieving a nine per cent reduction between 2019-20 and 2023-24.
In March 2024, HMRC announced that it would restrict a number of its helplines, including closing its Self Assessment helpline for six months, to address both the funding pressures it faces and the backlog of queries. HMRC reversed its decision one day after announcing the changes to the public.
The department had trialled closing and restricting helplines in 2023, but its evaluation of these changes did not consider stakeholder views or adequately assess the impacts of the changes on customers.
Sam Richardson, deputy editor of Which? Money,
Commenting on the report, Sam Richardson, deputy editor of Which? Money, the non-profit advisor, said: “This report paints a sorry picture of a service in serious decline. Just as more people are getting pulled into paying tax and needing help with complex tax queries, HMRC has been shunting people online without establishing if these changes are really what taxpayers need.
“Not being able to get through to HMRC could have serious financial and mental health-related consequences, so it’s crucial that the service urgently makes improvements to the time it takes to get through and the quality of help offered.”
What next?
The NAO recommends that HMRC develops more realistic plans for cutting the services it is replacing with digital channels and adopts a more customer-focused approach to encourage the take-up of new services. HMRC should also reduce avoidable and expensive forms of contact, for example by increasing opportunities for customers to send correspondence and documentation through secure electronic networks, and learn from the implementation of its digital projects.
Supporting NAO’s report
Tina McKenzie, policy chair, Federation of Small Businesses (FSB)
Responding to the National Audit Office (NAO)’s report on HMRC’s customer service levels, Tina McKenzie, policy chair, Federation of Small Businesses (FSB), said: “The finding by the NAO that nearly half of all calls to HMRC go unanswered says a lot. Tax compliance is a huge headache for small firms, who spend on average 52 hours a year trying to sort out how much they need to pay, at a collective cost to small firms of £25billion, an eyewatering sum.
“The long delays, troubles getting through, and struggle to speak to someone who can actually help rather than read from a script compound the stress for small business owners who have received letters from the tax authority saying there is a problem with their taxes.”
McKenzie also noted the panic that HMRC can cause businesses due to its ‘guilty till proven innocent’ approach and consequently, why good customer service is so vital in ensuring firms do not suffer or worry. She also highlighted that while digital solutions have their place, sometimes people not only want, but need a human touch and therefore, telephone customer service can never be completely ruled out.
“We welcome the NAO’s report, with its emphasis on the need for HMRC to make ‘realistic plans’ and take a ‘more customer-focused approach’. Small firms come in all shapes and sizes, but they all need to know they can get tax queries sorted without delay – something that HMRC needs to ensure is the case for everyone,” concluded McKenzie.
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