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HMRC's digital dreams rocked by reality check

25th May 2016
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HMRC badly misjudged the "cumulative impact" of its complex digital transition and released "too many customer service staff before completing service changes," the National Audit Office has said in a new report.

Between 2010-11 and 2014-15, HMRC cut staff in personal tax from 26,000 to 15,000, decreasing the cost of its personal tax operations by £257m.

In a damning statement, the NAO said “the quality of service provided by HMRC for personal taxpayers collapsed in 2014-15 and the first seven months of 2015-16 when average call waiting times tripled”.

Desperately stretched

Desperately stretched HMRC staff only managed to handle 71% of call attempts in 2014-15. HMRC met its target to handle 80% of call attempts in only 10 weeks of that year.

Customer service woes peaked in 2015 when waiting times reached 47 minutes for self assessment callers during the deadline week for paper returns in October 2015.

"Services have subsequently improved following the recruitment of additional staff but whether this performance is sustainable depends on HMRC achieving successful outcomes from its programme to make tax digital," said the NAO.

HMRC also plugged the gap by reassigning staff to its call centres in 2014-15. But according to the NAO, this caused issues elsewhere as HMRC had to defer essential work to maintain PAYE records.

"The stock of outstanding discrepancies in tax records requiring investigation rose from 2.4 million (March 2014) to 4.6 million (March 2015). Of these items, 3.2 million were high priority cases, carrying a risk that employees will have paid the wrong amount of tax. The recruitment of extra staff helped reduce the total number of unresolved items."

"It is unacceptable that so many people now risk paying too much tax because cutbacks at HMRC mean that items such tax codes have not been checked," said John Cullinane, The CIOT's tax policy director. "It is difficult to see how further cuts to HMRC staffing levels can be justified while this size of backlog on anything like this scale remains."

Balancing act

HMRC had expected to counteract the steep decrease in service staff increased automation, flexible procedure so staff could move between different services, and "moving customers from traditional channels to less expensive contact through the expansion of digital services".

"But demand for telephone advice did not fall," said the NAO.

"HMRC’s overall strategy of using digitally enabled information to improve efficiency and deliver service in new ways make sense to the NAO," said Amyas Morse, head of the NAO.

"This does not change the fact that they got their timing badly wrong in 2014, letting significant numbers of call handling staff go before their new approach was working reliably. This led to a collapse in service quality and forced a rapid expansion of headcount."

Making Tax Digital

In its report, the NAO warned HMRC to learn its lessons as the tax authority continues its digital metamorphosis. “HMRC needs to move forward carefully and get their strategy back on track while maintaining, and hopefully improving, service standards,” said Morse.

The NAO report also sternly warned: “HMRC’s transformation will be complex, and more radical than previous change programmes, and that HMRC will need to balance ambition with realism about its critical assumptions and contingency planning.

"We consider implementation problems [for MTD] are inevitable and HMRC will need commitment and resilience to deliver its vision."

Reacting to the report, The CIOT's Cullinane said, "This report sets out starkly what happens when Government makes over-ambitious assumptions about the speed with which savings from digitalisation can be realised and cuts staff prematurely. There is a lesson here for HMRC’s future digitalisation plans.

"Making Tax Digital promises significant potential benefits, but HMRC’s resources should not be cut further in anticipation of this before the cost-savings that digitalisation promises are actually being delivered."

What's been your experience of HMRC customer service? What do you think of the NAO's report? 

Replies (35)

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7om
By Tom 7000
25th May 2016 11:21

Yay the longer the waiting times, the more the clients get fed up and use us instead....

Go HMRC Go HMRC keep being bad :)

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By Moonbeam
25th May 2016 11:22

Most of us already know that the senior management of HMRC would have trouble running a whelk stall. Telephone queries could be avoided if tax wasn't so very complicated and HMRC's systems weren't so awful. Someone needs to tell HMRC - no, it's not all on their website.

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By bseddon
25th May 2016 11:41

So let me get this right, the complaint is that HMRC is not accommodating (at my expense) the cost of handling an arbitrarily large number of calls from people who have put off doing paper work they could have done any time in the previous six months. And this complaint is supported by members of the accounting profession?

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Replying to bseddon:
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By Tromdo
25th May 2016 11:51

The public have a right to expect that the public services their taxes (well, some of the public) pay for be available when they require. Not when someone arbitrarily says so.

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Replying to bseddon:
By taxbakbristol
25th May 2016 13:07

How do you know that they could have done it at any time in the previous 6 months?
Ill, away from Uk, waiting for information , many reasons!

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Replying to bseddon:
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By sallycox
25th May 2016 13:14

I suppose then that your clients supply sufficient information early so that you get online tax returns filed 6 months ahead of the January 31 deadline.
Many people who still file on paper are elderly and/or not sufficiently au fait with computerisation.
You are being grossly unfair in your comments.

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By Nick Graves
25th May 2016 11:51

Senior HMRC mange-ment KNOW the service is bad, but they do not let reality interfere with their pipe dreams.

HMRC - Middle Digital, more like...

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Tornado
By Tornado
25th May 2016 11:59

MTD

Making Tax Difficult

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By The Black Knight
25th May 2016 12:05

We are talking special expert irriots here so it's no great surprise.

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By raybackler
25th May 2016 12:17

Advice on the HMRC website is generally good, but when you call them, it is normally out of desperation, when the problem has gone way beyond being solved by the website. As to the voice recognition, it took four attempts this week to get YES right. Only a moron would make a call to the Employers line and go through that rigmarole unless they really had to. The people responsible for this fiasco continually try and cut accountants out of the debate and we are the very people who could help.

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By the_Poacher
02nd Jun 2016 12:23

Improvement plan:
1. Cut staff pay, that'll motivate them to work harder
2. Cut their severance terms, so they can't afford to take redundancy
3. Shut the local offices and make staff travel further to work to try and encourage older experienced and better paid staff to retire
4. Give them really poor IT to work with
5. Make pointless ill thought out changes to the legislation and expect HMRC to cope
6. Outsource guidance and simplify it to the point where it's useless.
7. Tell the weakest 10% of staff in teams that they "need improvement" even if they are pretty good
8. Get rid of proper training and use sheepdip CBT etc
9. Constantly change internal intranet so that no one can find anything and don't provide a search engine that works
10. Make staff spend 15% of their time on performance management paperwork
11. Spend as much time talking about and counting work as you do actually doing it

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Replying to the_Poacher:
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By rosataylor
26th May 2016 08:35

Good idea Poacher.

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By the_Poacher
25th May 2016 12:23

Improvement plan:
1. Cut staff pay, that'll motivate them to work harder
2. Cut their severance terms, so they can't afford to take redundancy
3. Shut the local offices and make staff travel further to work to try and encourage older experienced and better paid staff to retire
4. Give them really poor IT to work with
5. Make pointless ill thought out changes to the legislation and expect HMRC to cope
6. Outsource guidance and simplify it to the point where it's useless.
7. Tell the weakest 10% of staff in teams that they "need improvement" even if they are pretty good
8. Get rid of proper training and use sheepdip CBT etc
9. Constantly change internal intranet so that no one can find anything and don't provide a search engine that works
10. Make staff spend 15% of their time on performance management paperwork
11. Spend as much time talking about and counting work as you do actually doing it

Thanks (0)
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By Jim Dundee
25th May 2016 13:14

Anyone who has tried to access and find what they want on the web site will know how unnecessarily complicated HMRC can make things.
I recently changed address and tried to change my agent details online. The site responded by informing me there was no such postcode whereas I have not had this problem on any other numerous sites I had to visit to change address. I therefore was advised on the agent line to write to HMRC. I did this on 9 May and my agent address has still not been changed online.
I repeatedly come out of the site frustrated at not getting where I want to be.

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Tornado
By Tornado
25th May 2016 13:20

The Government (or at least those in the GoogleLand bubble) are acting like small children. Those that know better are telling them not to go near the fire as they are likely to get burned, yet they still move closer to the flames ......

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By stevebritgimp
25th May 2016 13:28

I thought MTD stood for Match of The Day. Obviously it should be mismatch of the day.

But enough of this - I have a client who HMRC are collecting Class 2 on a coding notice against the client's incorporated business.

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Replying to stevebritgimp:
Tornado
By Tornado
25th May 2016 13:53

stevebritgimp wrote:

I thought MTD stood for Match of The Day. Obviously it should be mismatch of the day.

But enough of this - I have a client who HMRC are collecting Class 2 on a coding notice against the client's incorporated business.

This cannot be possible. We are destined to have the most advanced Digital Tax System in the World .... it cannot be possible.

On the other hand, I have just tried to update my P11D software to the current year and even after half an hour on the phone to support it is still not working.

One of the biggest hurdles to overcome with MTD will be the reliability of the software which would be easier if there were not continuous changes for the developers to deal with.

Anyway, we can be reminded that "Taxation need not be taxing" to cheer ourselves up.

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By Robbas
25th May 2016 13:43

The reward for this was a damehood and a 2 million pound pension pot for the head of HMRC Ms Lin Homer. Success speaks for itself within the British Civil Service

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By Robbas
25th May 2016 13:43

The reward for this was a damehood and a 2 million pound pension pot for the head of HMRC Ms Lin Homer. Success speaks for itself within the British Civil Service

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By drakeltd
25th May 2016 13:56

So, due to the ineptitude of hmrc, as well as racking up telephone call charges we have to pay more in interest if tax has been underpaid.
Clearly Tax is taxing and not fair!

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By rosataylor
25th May 2016 14:05

That is the main problem. I have seen several mistakes when checking clients' tax record at HMRC website. Every time I go to HMRC website I see errors. Payments made by clients do not appear on HMRC website. It is showing that tax is still due but in reality tax has already been paid say a month ago. Payments via debt collection agency are only partly recorded. I know this for a fact because I was reconciling my client's payments against bank statements and against record from HMRC. All payment have all been cleared in the bank and still not showing in the HMRC website a year after they have been paid. What is happening?

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By timothyvogel
25th May 2016 14:26

anyone saying hmrc website is helpful should look at https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/va....
Anyone saying their helpline is helpful should hear our recording of them telling us that due to high call demand they could only refer us to the website (that counted as an answered call by the way)
Anyone saying the HMRC system is helpful should try getting them to explain why for overseas employment of UK resident people you have to make up a fictional UK employer with a fictional PAYE reference number

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By The Black Knight
25th May 2016 14:49

In the meantime Billions are going missing Ha ha

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By tanyajackson
25th May 2016 15:47

This whole thing is unacceptable. I have clients waiting for refunds, which when chased by telephone, a recorded message that the line is closed and if a refund is due it will be processed. So totally reliant on HMRC doing it right. When RTI first came in, HMRC closed the line to report an annual payment schemes so those with nil filings for 11 months had their payroll closed. I have been directly advised from HMRC that the post is put in a pile with a date stamp and not actually opened for at least 3 weeks, so on numerous occasions have replied to HMRC letters with a reply by date, which yes is within 3 weeks, so because my reply is sitting in a pile to be opened in 3 weeks HMRC send another letter to advise they are waiting for a reply. What a waste of our taxpayer money and what a shambles.

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Tornado
By Tornado
25th May 2016 16:09

"What a waste of our taxpayer money and what a shambles."

It might be some fun to make paper planes out of their letters, or perhaps an origami duck.

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By cstwragby
25th May 2016 16:10

They haven't a hope in hell of making MTD work. I've lost count of how many errors they've made with Class 2 being incorporated into Self Assessment.

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By raybackler
25th May 2016 16:47

Still waiting for a reply to a letter I wrote to HMRC on 1st February on a difficult topic (for them that is). It was a little out of the ordinary, but an experienced person would be able to answer easily. I suspect that after opening the letter it has been parked somewhere as too difficult or placed in the in-tray mountains of their few experienced staff.

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By jennytcrowley
25th May 2016 21:40

The HMRC service level is appalling. If they were a private business they would be bankrupt. The level of double standards when it comes to communication is wrong. I have had enquiry letters to clients where by the date on the letter is 3 weeks prior to receipt with then a matter of a days given to reply, and yet if we write to appeal a penalty they take several months to respond and up to 8 weeks to even open the mail.
The phone service for agents isn't too bad, its Joe public that get the short straw, and for the lines where there is no agent number, eg PAYE the waits are horrendous. I have even been on hold for 20 mins and then HMRC just cut you off dead.
Much reform is needed, there should be some sort of equality in the speed of information provided by them and the expectations from the taxpayer.

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Tornado
By Tornado
26th May 2016 10:30

Further to my post of the 25th May 2016 -

"On the other hand, I have just tried to update my P11D software to the current year and even after half an hour on the phone to support it is still not working. "

After another three quarters of an hour on the phone to support today, the first person clearly did not understand the program, the next engineer said it was not his department and the third support person did not know how to deal with this and wrote down one of the error reports and then said she would get back to me when they had worked out what had gone wrong.

In the meantime I am ready to prepare and submit P11ds but cannot.

There is much more to Making Tax Digital than just a great idea, there has to be at least, a robust infrastructure in place to ensure that it all works correctly.

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By davidkitley
26th May 2016 12:04

I have tried to access my personal HMRC digital tax account twice this morning without success. HMRC message :

Sorry, we’re experiencing technical difficulties

Please try again in a few minutes.

Well, I tried again and it's still not working.

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Replying to davidkitley:
Tornado
By Tornado
26th May 2016 12:18

davidkitley wrote:

I have tried to access my personal HMRC digital tax account twice this morning without success. HMRC message :

Sorry, we’re experiencing technical difficulties

Please try again in a few minutes.

Well, I tried again and it's still not working.

Time for a new description -

MTDIW

Making Tax Digital Isn't Working

or perhaps

Making Tax Difficult Is Working

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Replying to Tornado:
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By Sarah.Collins18
26th May 2016 12:52

Was having problems on the HMRC website (unable to login - same error message as above), but have juste managed to login now, though according to HMRC Helpline chats 'no current problems!!)

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Tornado
By Tornado
26th May 2016 17:19

In contrast to the appalling mess that MTD is turning out to be, I would like to heap my highest praise on the service that Companies House provides.

A different function I accept, but still able to handle millions of documents with ease. I can file an Annual Return using their software and it can be on FREE public view within minutes. The same applies to the filing of Company Accounts, in my case using commercial software. Making Companies House Digital has been introduced in a very sensible way over a period of time and has allowed the service to evolve into a Digital Service by accepting the submission of documents either electronically or on paper over generous transition periods thus allowing users to adapt confidently and at their own pace.

I am by no means anti-digital, on the contrary I have been preparing Computer Generated Accounts since 1981, had my first mobile phone in 1989 and have been corresponding with my clients by email since 2000, but technology needs time to adapt as well as people and should only be applied when and where it works best.

10 out of 10 for Companies House and 5 out of 10 for HMRC.

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By njpandya
26th May 2016 17:24

Once again under the supreme leadership of one & only Lin Holmer. One cannot beat her consistency!

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By AndrewV12
16th Nov 2016 15:46

Typical ambitious Government project, doomed to failure, remember the government cannot do anything without an additions 10,000 civil servants and countless external consultants.

"Making Tax Digital promises significant potential benefits'

What benefits and whos going to make them. It also promises significant financial costs.

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