HMRC customer service falls to ‘all-time low’, gov report finds

Customer service levels at HMRC have fallen to an all-time low, a report by the Public Accounts Committee (PAC) has found. The report, published today (28 February), “expressed its disappointment” as service levels at the tax authority continued a five-year decline, with written evidence to the PAC’s inquiry about HMRC’s performance demonstrating taxpayers’ “exasperation”. Since the PAC’s last report in January 2023, HMRC’s performance has continued to deteriorate. In 2022-23, 62.7% of callers waited more than 10 minutes to speak to an adviser, up from 46.3% in 2021-22. HMRC told the PAC’s inquiry that it did not have the resources to meet rising demand for its phone and post services and is instead directing callers to use digital services which it “insists are good quality”. The PAC said it “received a lot of evidence to the contrary” from taxpayers and their agents. While tax revenues are at a record high, hitting £814bn in 2022-23, HMRC still fell £2bn short of its £36bn target for compliance yield, and expects to do so again in future years. The PAC’s report also noted a “significant reduction” in criminal prosecutions by HMRC, from 691 in 2019-20 to 240 in 2022-23. HMRC says that it is increasingly selective in using its criminal investigation powers and seeking prosecution, in part due to backlogs in the criminal justice system. However, the PAC said it was “concerned that if fewer criminals are prosecuted this sends the wrong message”. At the same time, the PAC scrutinised issues around the IR35 rules on off-payroll working. The PAC was concerned that HMRC’s approach to tackling IR35 is deterring legitimate economic activity, and that a “lack of confidence in how to apply the rules, together with HMRC’s tough approach when taxpayers make mistakes, is unnecessarily putting companies off using contractors”. 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. HMRC has decided to push taxpayers to online support but as both tax complexity and taxpayer population increase this is not good enough. “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.”