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A man has nipped out for a cup of team whilst his canine pal has destroyed the sofa | AccountingWEB | HMRC achieves world-beating underachievement
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HMRC achieves world-beating levels of underachievement

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Philip Fisher highlights and comments on some of the more serious accusations against HMRC in National Audit Office's latest damning report.

23rd May 2024
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It is a horrible thing to suggest but imagine for a moment that your business is called HMRC and is attempting to maximise income at the same time as keeping “customers” happy. Most of us would seek to provide exceptional service, while accepting that this should be achieved while keeping costs within reasonable bounds.

We would primarily seek to measure success by looking at top line income, while keeping an eye on costs and attempting to eliminate issues such as pilferage and other unnecessary losses, for example by implementing inefficient IT systems.

Using these measures, those in the higher echelons of HMRC and overseeing them in government are failing spectacularly, according to the latest Customer Service report on HMRC from the National Audit Office (NAO).

The tax gap

Continuing the shoplifting analogy for a moment, our taxing authority has a number of security cameras but most point in the wrong directions and only has security staff available on a part-time basis. The rest of the time, customers can take what they want with relative alacrity.

When it comes to maximising the top line, nobody is quite sure about this but there is general agreement that there is a tax gap of at least £35bn.

Going further, most accountants would not be surprised to discover that many who ought to be taxpayers are slipping through the net, while others are happy taking a flyer on understating income or inflating expenses. In some cases, this is because they cannot get an answer out of HMRC on a potentially confusing or tricky entry.

‘Depressingly predictable’ data

Cherry picking some of the data from the NAO report is depressingly predictable, largely because the decline has been going on for a decade or more.

Older readers might fondly recall the days when tax offices were local and inspectors knew their business and their patch. In some ways, centralisation is a good thing but rather like taking bobbies off the beat and sticking them behind computers, removing local tax inspectors can encourage evasion or abusive avoidance by dodgier members of the community.

AccountingWEB has already highlighted the 798 years or seven million hours people spent waiting to speak to an HMRC adviser on support phone lines. To put this into perspective, these waits have more than doubled in three years. That is quite some achievement.

Apparently, HMRC spends £881m in customer service. This sounds like a lot of money but given that even the most modest estimate of the tax gap is 40-50 times this amount, perhaps it is inadequate?

‘Stunningly bad’ telephone service

Further, given the choice between dealing with a digital service, a bot or a human being on the end of a phone, however inefficient, most normal people would much prefer to deal with someone who may be able to help them. This is not the view of HMRC, which believes that humans should be taken out of the picture completely.

The telephone answering statistics are stunningly bad, though a higher percentage of correspondence is now answered within 15 days, possibly because far fewer people are writing in.

In 2023-24, just two thirds of calls were answered at all; therefore, one in three calls failed. Imagine if this was your business and one third of existing or prospective clients gave up in disgust before calling a competitor! 

Even the modest proportion that got through had to wait an average of 23 minutes to speak to anybody, almost five times as long as in 2018-19.

There are some other statistics that have been heading inexorably upwards. In particular, the 91,217 complaints in 2022-23 was 39% up on the figure three years before.

Other statistics around calls are equally depressing and anyone interested can read the summary report in detail or even the full version.

It doesn’t help that many customers find the digital services unfriendly and unhelpful unless they have very straightforward queries, while a significant section of the general public still has no idea that they exist. This is particularly relevant where someone is not on the HMRC radar that may have an obligation to complete a return.

There is some irony in the fact that even by HMRC estimates, which may naturally incline to the low side, 72% of calls resulted from HMRC’s process failures and delays.

Nul points for HMRC

What would your solution to all of these problems be? You guessed it, there is a 14% planned reduction in HMRC’s front line customer service workforce next year, which is bound to improve the situation. More positively, plans to cut the service and most of the year were withdrawn following embarrassing media coverage.

Further, it also has no concrete plans to meet its telephone performance target. Even that is unchallenging, allowing 15% of calls to remain unanswered, although the actual figure is closer to 35%.

The sad conclusion is that “Poor service levels have a detrimental impact on customers, and HMRC does not know the impact it has on economic activity and tax revenue.”

The NAO offers a series of helpful recommendations but, given past experience, there is no point in repeating these, as they will be ignored by those in positions of power. 

In summary, HMRC is now performing like a standard British entry in the Eurovision Song contest. It deserves and is receiving nul points but there is plenty of room for improvement.

Replies (25)

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By Tom+Cross
23rd May 2024 09:51

The regretful aspect here is, there's nothing to surprise any of us, who work, on a daily basis, with HMRC. I imagine that the 'disease' is replicated across many Government agencies.
If the remuneration of the hierachy matched the results, Sir Harra would have been out of a job, many years ago. As it is, he'll be left in post, until he's enobled 'for service and commitment to public office'. When he leaves, there will still be no method for agents to contact HMRC, by way of email. Shameful!
There really seems to be no appetite, to bring about change (improvement), and in fairness, this attitude is reflected throughout our political system and the current shambles, within Westminster.
There are, seemingly, no more characters, with stamina and vigour and a zest for life. UK growth aspirations, appear to be at the bottom of any list.
How was all of this allowed to happen?

Thanks (18)
Replying to Tom+Cross:
Rob Swan
By Rob Swan
23rd May 2024 15:06

Irresponsible politicians backed up by irresponsible civil servants is how we got here. (Or vice-versa if you're a Yes Minister fan!) Politicians and senior Civil Servants ARE the problem. There's little chance of any improvement down the road....

Politicians and Civil Servants could do the 'right thing' but... Will Harra ever improve HMRC? - I trust you get my point!

Thanks (5)
Replying to Rob Swan:
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By FactChecker
24th May 2024 14:10

It's not just HMRC (as per reference to Policing and local bobbies in the article), nor only govt/CS run operations (almost all big business including banks and more), that claim to believe in this de-humanised approach to 'support'.

What they all fail to understand (or more likely choose to ignore) are two obvious facts relating to two distinct sets of the population:
1) there are those who intend to abide by the regulations and, in order to do so when unsure of something, seek support;
2) there are those who don't feel bound by those regulations and are prepared (or even actively seek) to evade them, so seek ways to avoid detection.

Moving from the human (apparently now seen as old-fashioned) version of local support services to central bot services ... hinders/fails the first group - whilst doing nothing to make life harder for the second group (indeed seems unconcerned at their growing prevalence).

A novel version of 'carrot & stick' - where the stick is only applied to those who are trying to 'do the right thing' and only miscreants see the carrot as a benefit!

Thanks (10)
Rob Swan
By Rob Swan
23rd May 2024 10:01

Great points and nice article Philip.

Great to see HMRC is 'officially' excelling at something! ;P

It seems many within the AW community love to hate HMRC, and with good reason. They do not have 'customers' - as they like to claim! As with almost all public services and the growing up of the Millennial generation, face-to-face and person-to-person contact is avoided (at all cost) in favour of a 'screen' and a 'technology' solution.

"In some ways, centralisation is a good thing". Is it? Things where much better "when tax offices were local and inspectors knew their business and their patch".

Most of my generation (Boomer) understand where that's going, why it will never work, what the consequences are and how to fix it. But what are we (the Boomers) doing? Heading towards retirement and tiring of trying to 'educate' the younger generations who, apparently, know better!

In addition, tax is getting exponentially more complicated and the result is probably the exact opposite of the goal.

Personally, I cannot see HMRC going in any other direction - for the foreseeable future. Maybe a change of government will result in improvements? Let's hope so. Maybe HMRC will collapse into chaos? Let's hope not!

Thanks (10)
Replying to Rob Swan:
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By Diana Miller
23rd May 2024 16:26

The sad thing is that providing a really good service to the smaller clients is getting progressively harder to do economically and these are the people that really don't understand the system and are desperate for the help that they cannot get from HMRC . We had loads of calls when HMRC closed their phone lines from local people desperate for help in getting their taxes right, asking what were fundamentally basic questions when they could not understand the HMRC online guidance. I too remember the local tax offices ( I have been doing this job for far too long) and they were brilliant.

Thanks (9)
Replying to Rob Swan:
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By johnjenkins
28th May 2024 09:51

We have actually reached an era whereby the needs of humans have been totally eradicated in favor of needs of big business. Maggie realised the two were separate. So we are heading for pre-Maggie days. In a few years there won't be any one man band business, which I believe is the root of this "forget the needs of the individual" attitude. You can see it everywhere.

Thanks (3)
Stepurhan
By stepurhan
23rd May 2024 11:27

Centralisation does allow for cost efficiencies, and theoretically means you can have specialist departments that it might not be possible to have over the whole of UK. Sadly, as with so many other things, HMRC seem to have failed to secure the benefits of centralisation.

I am old enough to remember being able to visit a local tax office and speak to a knowledgeable person there. Theoretically that should mean that I speak to a knowledgeable person when I phone in now. How rarely that is the case.

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Replying to stepurhan:
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By Yossarian
23rd May 2024 11:53

I recall about 25 years ago phoning our local tax office to query a client's PAYE code change. The lady I spoke to said 'Ah yes, I calculated that one, I don't need to get the file out I can remember why I changed it" then proceeded to explain it from memory. Just imagine that now!

Thanks (11)
Replying to Yossarian:
Rob Swan
By Rob Swan
23rd May 2024 12:36

AND....

Local tax inspectors would be happy to visit you at your place of business and be really REALLY!!! nice and helpful :)

...we seem to have 'progressed' since those 'good old days' ;)

Thanks (8)
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By Trethi Teg
24th May 2024 08:27

I get a little tired reading about the "tax gap" that we have. £35 billion? Where do these numbers come from? Assumptions and then using those assumptions incorrectly to come up with a figure which supports the point the writer is attempting to make.

However, let us assume that it's correct and that, for instance, the reason is businesses improprrly reducing it's VAT or tax liability. The result is the business or individual keeps the tax lost. What do they do with it? They dont save it as savings are at an all time low. So they must spend it. If they spend it they will very likely incur VAT which will be paid to HMRC. The recipient will also pay tax on the resultant profit together with NI etc.

So suddenly the magical figure of £35 billion is reduced to, perhaps £20 billion.

Even then if the £20 billion were received by HMRC, what would be done with it. The Governement would waste a large proportion of this new found money.

Providing the tax evasion is not going overseas then it circulates in the economy.

The answer, drastically cut the public sector and drastically cut taxes. Get business moving and the tax take will increase dramatically.

Thanks (6)
VAT
By Jason Croke
24th May 2024 08:39

I think the terrible telephone answering and post replying statistics are a distraction.

Why are people calling in? Tackle that and then the need for call centres reduces.

Why are people calling in? Because HMRC produce so many errors of their own making, constantly punching themselves in the face and then blaming the taxpayer for long call times.

Every day, every single day I am dealing with HMRC incompetence, nobody knows what they are doing, nobody can make a decision, when decisions are made they are often wrong, you make endless calls trying one number after another in the hope you can speak to someone who actually knows how to spell HMRC.

HMRC's letters are now useless, we receive letters for clients into our office, just a VAT or UTR, no client name, one HMRC letter says "thank you for the changes made" but doesn't say what the change was so we have to call HMRC to make sure its not a fraudulent act, another letter I had last month was removing penalties that HMRC had charged in error but then yesterday get a letter from debt management (date long after the penalties were cancelled) still chasing the debt, called debt management and they can't see on their system that the penalties have been removed and they don't have access to letters on taxpayers file, they can only see debts/payments.

Nothing is working at HMRC, it is a total bin fire. These helpline call statistics are what HMRC want you to focus on because the real issues are much more deeper than waiting 30minutes on the phone. so whilst we're all moaning about the helplines, the NAO/PAC are not seeing the underlying issues.

Thanks (19)
Replying to Jason Croke:
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By FactChecker
24th May 2024 13:53

100% Jason.

Unfortunately I don't have verifiable statistics (I wonder whether HMRC do and hide them, or also don't know), but my observations indicate that:
* between 20-25% of calls/letters to HMRC have as their origin/source an error created by HMRC (wrong match / out-of-date / corrupted data / wrong use of their own rules / etc);
* because it's so hard to get through to HMRC, a minimum of 2 attempts will invariably be needed to raise the issue;
* and because any response has a barely 50:50 chance of being both correct and apposite to the query, even a response will engender at least one more enquiry.

Put those together and you see that merely halving those original HMRC errors would trickle down to reduce the overall volume of taxpayer/agent calls by a minimum of a 1/3rd.
It would be a start wouldn't it?

Thanks (9)
Stepurhan
By stepurhan
24th May 2024 15:24

When I first started in accountancy (cough) years ago, there was a simple yet effective way of dealing with trickier matters.

On Friday lunchtimes both accountants and HMRC inspectors congregated in the same local hostelry. Many a difficult matter was amicably resolved over a pint.

That pub, whilst still open, isn't what it once was either.

Thanks (3)
Replying to stepurhan:
Rob Swan
By Rob Swan
25th May 2024 07:40

Ohhh....

Those of us old enough well remeber how many business and technical matters were resolved pleasantly over a pint or three.

stephuran, you may have hit on something there (...nothing new under the sun, etc, etc...). Revive a failing sector of our economy, tick; solve HMRC's PR crisis, tick; draw many and much needed recruits to the accounting profession, tick. Whether it's Money Mondays, Taxing Tuesdays or... Finance Fridays ;)

What an excellent (new) idea. I'm in!!

Thanks (0)
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By bigmuggsy
26th May 2024 07:01

In 2023-24, just two thirds of calls were answered at all; therefore, one in three calls failed. Imagine if this was your business and one third of existing or prospective clients gave up in disgust before calling a competitor!

Basically sums it up in my eyes

Thanks (3)
Replying to bigmuggsy:
Rob Swan
By Rob Swan
26th May 2024 08:57

"It's worse than that, he's dead Jim!"
('He' being HMRC and 'Jim... Well, you can guess that one ;)

Maybe the next big accounting show should hold a funeral for HMRC?
If HMRC is not officially 'dead', it's only signs of life are due to life support and we all know that MTD will not keep HMRC 'alive' for very long!

Just a thought.

Thanks (3)
Donald MacKenzie
By Donald MacKenzie
28th May 2024 09:35

HMRC is typical of much of the public sector; badly run and in denial.
We get situations like Post Office Horizon scandal, poor IT project delivery or things like infected blood disaster in NHS, and awful Military procurement overruns. What happens? Deny, delay, depart.
Civil servants and politicians deny there is a problem, delay investigation or revision,then depart with generous pensions.
We need change. HMRC must again be made fit for purpose, with sufficient manpower and will to actually do the basics - such as answering calls and making visits and record checks, up to closing tax loopholes that allow international giants to pay ludicrously low taxes.

Thanks (5)
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By Mr J Andrews
28th May 2024 10:17

Great summary , Philip , of how this dumbed down department continually stoops lower by the month under the leadership of Harra. The bottom of the barrel of rotten apples must surely have been reached. Almost every paragraph sunmmarises the flaws , weaknesses and general crap management.

You ask .........''what would your solution to all these problems be''. For starters , introduce accountability. Before starters, get rid of Harra.

Thanks (1)
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By Rgab1947
28th May 2024 11:35

Is there a solution? Yes. Will it be implemented? No.

I get depressed.

Thanks (2)
Ruth Corkin
By Ruth Corkin
28th May 2024 11:53

I'm not surprised! I spent 1 hr and 11 mins waiting for a call to be answered by the online VAT technical help line recently and they told me I could make a change to my Agent Services Account online (which I could not), only to be told by someone else that the change function had not yet been launched.
Just last week, I had a scheduled call to test the Single Trade Window for Customs and failed to be able to login because my email address had not been "whitelisted") despite the fact that the login required Government Gateway details and not an email!

DEFRA is not much better though, one of my team kept being registered on their system as an employee who had left 18 months previously!

Thanks (4)
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By JackH
29th May 2024 15:38

My daughter sold her house in September 2022 and paid CGT in time online. She filed her return in early January 2024. HMRC have failed to link the "pre-payment". In fact she overpaid by estimating tax on the gain at 40% so is due a refund.

I assisted her sitting by her side so if the PPD and online return system fooled her it also fooled me. It is still possible it was our error rather than that of the system or HMRC. They chased her for the "unpaid tax". She replied by letter drafted by me on 12 March 2024 enclosing pdf submission and payment receipts. Since then 3 computer-generated chasers have arrived.

She wrote again on 2 May saying that unless a substantive response is received no further correspondence will be entered into. No telephones for us as HMRC can't be trusted. My legal training and past experience of the Beast impels me to conduct all business with HMRC by post, first class and tracked, so a complete two-sided audit trail will be available to FTT/County Court/Ombudsman. I do so enjoy being a litigant in person. So ELEVEN weeks and counting; with no acknowledgment let alone a reply.

HMG has had its interest-free loan of 15 months but its useless rottweilers are unable to conduct correspondence with a "customer" within any objectively acceptable timescale. When in a hole, surely one should stop digging?

Thanks (4)
Replying to JackH:
Rob Swan
By Rob Swan
29th May 2024 18:09

Feeling your frustration JackH.

Given that HMRC are so busy referring to taxpayers as 'Customers', perhaps your best course of action would be threatening to take your 'custom' elsewhere!!

Just a thought.

Thanks (1)
Replying to Rob Swan:
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By johnjenkins
30th May 2024 09:32

Rob, wouldn't it be fun if a version of Aweb was in every country. We could then compare which Tax regime was the best and move our business there.

Thanks (1)
Replying to johnjenkins:
Rob Swan
By Rob Swan
30th May 2024 10:50

Tax haven of choice for the greedy. As for me...
I'm British and firmly committed to the UK, British people and Britsh prosperity. If ever I trade overseas I'll be sure to set things up so the people and governments in those nations also get to benefit most from the trade carried out in their jurisdictions and the profits earned from it.

But....
... It would be great to see who has the best tax system, most efficient admin, and delivers the best levels of service. (I was in France a few years ago and we had to deal with taxes in France. Their rates are high but there system is excellent and works very well. I'd be happy to pay for that :)

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Replying to Rob Swan:
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By johnjenkins
30th May 2024 12:00

I too am committed to British values, however I feel the best is behind us.

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