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Treasury Committee puts the boot into HMRC

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29th Jul 2011
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A report published by the Treasury select committee claimed HMRC’s “unacceptable” quality of service failed due to a number of factors, including “overly ambitious expectations for IT projects, sustained cuts to resources, a management culture of ‘command and control’, increasingly complex tax legislation and the legacy of the [Revenue-Customs] merger.”

It highlighted a number of areas of “serious” concern, including “Unacceptable difficulties contacting HMRC by phone during peak periods,” and, “Endemic delays in responding to post”.
The report, Administration and effectiveness of HM Revenue and Customs (PDF download also available), said the organisation would face further difficult years as it moves to resolve open cases in PAYE and “further ambitious IT upgrades”. As a result, the Committee warned it would monitor the performance of HMRC during the remainder of the parliament, and “[expects] the department to deliver where substantial improvements have been promised.”
The Treasury committee’s report into HMRC follows on from others published in recent weeks, including one from the National Audit Office, which concluded the organisation's planned £1.6bn reduction in running costs represents “a big challenge”.
According to the earlier NAO report, HMRC is making progress but warned “it needs to better define the service it is aiming for; improve its understanding of costs; and develop its implementation plan [if it’s to achieve value for money].”
HMRC’s progress in achieving efficiencies was also acknowledged by the Treasury Sub-Committee report, though it warned if further reductions in resources are badly managed, “HMRC’s performance will continue to deteriorate”.
“There was near unanimity among our witnesses that the reductions made so far have had a damaging impact. We are particularly worried as there is no evidence that the methods that management will deploy to find ‘efficiencies’ and ‘cost savings’ have changed in any substantial way,” said the report, which added, “We also believe there is a tension between the drive for ‘more automation’ and ‘centralisation’ and the desire to empower and boost the morale of staff who must deliver the cost savings.”
The report cited a number of witnesses and their concerns over the management of future reductions and cost efficiencies at HMRC. Paul Aplin, of the ICAEW’s tax faculty said problems in the past had been caused by “cuts in anticipation”, some he said had characterised the organisation’s change programme.
In reaction to the effectiveness of cuts in the past, the report recommended Whitehall looked again at the savings expected to be delivered by HMRC compared to the efficiencies expected in order to deliver them – and to build in a measure of contingency in case of “unexpected problems with implementation”.
“Technological improvements and process changes within HMRC have and will continue to deliver genuine efficiency savings,” the report said. “However, there have been credible suggestions that HMRC has in the past made savings by reducing staff numbers before the enabling efficiencies have been fully realised - with resulting impacts on performance and costs.”
‘Bleak’ customer service - phones and post
The report also turned its attention to what it said was the continued dissatisfaction among the public and tax professionals with HMRC’s service delivery, which it would warned could “undermine respect for the tax system”.
The report cited 2010 reports on HMRC by both the National Audit Office (NAO) and the Public Accounts Committee (PAC), which described HMRC service levels as poor. It noted the PAC report, which said the Department was “taking steps to improve its performance”. In particular it highlighted: 
  • Phone answering - The Treasury select committee noted that HMRC’s own Annual Report and Accounts revealed its phone-answering performance slipped to a five-year low from 75.8% of calls answered in 2009/10 to just 48% in 2010/11.

    On a montly basis, HMRC answered 92.6% of 3.8m calls in November, but this fell to 41.1% when it had to field 3.8m calls in May 2010. HMRC told the PAC for its report that it aimed to answer 90% “as soon as possible”, but the Treasury select committee responded: HMRC’s performance at responding to telephone calls has been patchy at best and unacceptable at worst. “Based on past performance we do not have confidence that the department will be able to achieve its target,” the MPs concluded.
     

  • Post - In evidence, the Commons committee received a substantial number of letters from the public expressing concern and even disbelief about the time taken by HMRC to respond to post. “Cases of replies being received only after two or three months, in each case from a different geographic location, are not uncommon.” The ICAEW’s Paul Aplin said accountants were regularly used to waiting two to three months for a reply to a letter. “When we ring to chase, the answer we regularly now get is, ‘We can’t find the letter.’ If you chase below two months the answer is, “It hasn’t come to us yet”. If you wait too long the answer is, “We can’t find it”; so you have to write again and go through the process again.”
     
  • HMRC gave the committee graphs showing performance that in November 2010, approximately 60% of post received was turned around within 15 days and 90% had been turned around within 40 days. Performance generally was fairly consistent except for 2009 when,in March, turnaround within 15 days fell to less than 40%, and performance generally was more inconsistent than previous and subsequent years. The CIOT and ATT both noted that HMRC’s Debt Management Unit has been known to try and recover incorrect amounts because relevant mail had not been opened.

    The MPs concluded, “Long delays in responding to post at HMRC are endemic. This is unacceptable.” They called for HMRC to establish minimum service standards for dealing with post - through the whole encounter rather than as individual items opened and asked for an indicative timetable from HMRC as to when it would achieve those standards.

The Treasure report said the prospects of HMRC improving its customer service in the near future “appear bleak,” since the department is “still wrestling with the fall-out from the implementation of NPS and does not expect to clear the backlog of open cases until 2012”. It added that in fact HMRC chairman, Mike Clasper didn’t expect customer service to be in “a great place” until 2013.
NPS and PAYE changes
The report also discussed the future of the National Insurance and PAYE System (NPS) and the forthcoming Real-Time Information (RTI) system, which is scheduled to launch in 2013.
While the NPS should “ultimately make PAYE work more effectively and ensure efficiencies across the Department,” the report said the flawed implementation of the system had caused “significant” damage to both HMRC and the UK tax system.
“It is crucially important for the credibility of the management team that the 2012 target for clearing open cases is met and that improvements in overall performance follow soon afterwards,” said the Treasury Sub-Committee. Their report said the success of the NPS and Real-Time Information system will depend on the effectiveness of HMRC to cleanse the data it received and holds. 
Overall, the Treasury committee said it welcomed the introduction of Real-Time Information, but agreed with professional bodies that the system “must be tested thoroughly before full implementation, with full consultation with users and close co-operation with the Department for Work and Pensions at all stages”. It further noted that under current plans, large employers will be required to use RTI from January 2013, “which is before the system has been tested through one complete tax year”.
The report described HMRC’s timescale to deliver RTI as “ambitious” though admitted that was driven in part by the importance of the project in respects to the delivery of DWP’s Universal Credit. It said the timescale was actually more ambitious since HMRC “will still be resolving the legacy of open cases and stabilising the National Insurance and PAYE Service during the project’s early stages”.
It pressed the need for both DWP and HMRC to have contingency plans in case a delay in the delivery of RTI was required, and called for an external audit of the system to ensure preparations for the system as “as robust as possible”.
“We expect arrangements to be put in place for the National Audit Office to report quarterly to Ministers, this Committee, the Public Accounts Committee and other relevant Committees to ensure Ministers in both Departments can be held properly accountable for the progress of the project,” it added.
In response to the report, Graham Black, President of the Association of Revenue and Customs (ARC), said: “The Committee’s recognition that the cuts in HMRC are having a serious impact on delivery is one that we share. On the plus side, the report recognises the good work of HMRC professionals, for example in dealing with large businesses, in the face of severe cuts. We also welcome HMRC management’s commitment to improve service standards, though further cuts may undermine this. 
“However, all this reinforces the message ARC has consistently put across: the cuts have gone too deep, and that more resources for HMRC would help defeat the deficit. Indeed, extra resources for HMRC would bring in more than the Government hopes to save by raiding the pensions of nurses, teachers and civil servants.”
The association also said it still has “grave concerns” about how HMRC is managed.
Black said: “While the Committee pointed to low morale and suggested HMRC leaders needed to change their approach, ARC is now in dispute with HMRC because of attempts by the department’s board members to worry and bully staff. This hardly suggests that HMRC is taking the Committee seriously, which is a serious error of judgement.”
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Replies (22)

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By Top_Cat
30th Jul 2011 15:32

EXCUSES

I'm sick of hearing people claim it's "the cuts" that are causing the problems. that is utter rubbish.

HMRC has been a shambles for years and it really is time for the profession to step forward, start lobbying our MPs and demand changes in attitude from HMRC.  The pompous overbearing "we are never wrong", "you are guilty until proven innocent" approach by the majority of tax officers is unacceptable.

We need to act, we need to refuse to accept poor service, and we need to go over the heads of HMRC and hit our MPs with complaints every time HMRC foul up.

 

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
01st Aug 2011 09:23

HMRC chairman apologises

HMRC's non-executive chairman, Mike Clasper, made the following comments to the BBC on Saturday, shortly after teh Commons Treasury Select Committee report was published: 

"We are not happy with our performance in 2010... It simply wasn't good enough on post and telephone and I'd like to take the opportunity to apologise to the people who had to take a long time to get through, or we didn't get back to them quick enough with the post.

"In 2011 we've been working very very hard to improve things. We're handling the calls immediately much more frequently than we did in 2010 and as far as individual customers are concerned you know the post levels have dropped in half.  "That's not where we want to be but it's a lot better than where we were in 2010."

HMRC said it has recruited 1,000 extra contact centre advisers to handle calls during "exceptionally busy periods".

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By John Snowden
01st Aug 2011 12:00

HMRC performance

In part I agree with Top Cat.

There really is an attitude problem in HMRC which starts at the top. I see they have been losing cases around the meaning of 'reasonable excuse' for late filing or retuns. This is excellent.

I have been e-mailing my MP for months and months now with examples of utterly awful service and agression on the part of HMRC staff.

 

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By Nick Graves
01st Aug 2011 12:45

Too true.

I fear if Hartnett doesn't get a dose of reality soon, he could find himself Murdochated. 

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By Eric Robinson
01st Aug 2011 13:13

A Robin is a bird but not all birds are Robins

 Top cat’s sweeping generalisations are not very helpful. Having said that  I agree that making appropriate  representations will be the only way to see some improvement in service.

 

 

A swap that involves the shedding of -say 1000 experienced and capable staff for 1000 raw untrained personnel, who work from a pick list or flow chart, does not seem to be a good deal to me.

 

In truth a great deal more than 1000 staff with years of experience in their grades have been lost to the service over the past few years and those of a comparable background that remain have become bemused and frustrated by poor management at senior levels.

 

In my 35 year experience in HMRC I found certain accountants more capable and professional in their approach than others. It is the same in any walk of life. In the main we all do our best and it is only a minority that seek conflict by being unreasonable. Retaining a sense of proportion – often in difficult circumstances – helps retain a healthy balance.  

 

 

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By jamesbailey
01st Aug 2011 13:17

HMRC meltdown

We recently complained to HMRC about a repayment they were taking months to process.

 

We received a reply from one of their Complaints people saying that due to the volume of complaints they were dealing with, they would not be able to deal with our complaint for at least 35 days.

 

Needless to say, we complained about this...

 

 James Bailey

Tax Partner

Robinson Reed Layton

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By johnjenkins
01st Aug 2011 13:53

Come back

Gordon Brown - all is forgiven.

 

 

(joke)

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By billy dixon
01st Aug 2011 14:25

HMRC quality

it was that clowns idea to merge the departments in the first place. It has been chaotic since 2005. I should know I worked for HM C&E the HMRC for 32 years until I managed to 'escape'.

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By Top_Cat
01st Aug 2011 14:32

Sweeping - or experience.

Top cat’s sweeping generalisations are not very helpful. Having said that I agree that making appropriate representations will be the only way to see some improvement in service. 

Posted by Eric Robinson on Mon, 01/08/2011 - 13:13

 

 

Sadly it's not a "sweeping statement", it's a statement of experience.

HMRC have now been told that their threatening demands sent to taxpayers are, in many cases, ILLEGAL.  Just how low does an organisation have to sink before action is taken?  I would love to see every person who has received one of these illegal demands take HMRC to court for damages. 

There has always been a problem with HMRC staff displaying this "guilty till proven innocent" attitude, and making "demands" which they have no legal right to make. 

HMRC requires drastic surgery, a complete change of attitude, and a change of management and until that happens it will remain a disgrace.

 

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By Eric Robinson
01st Aug 2011 14:57

Sweeping

Personalizing the issues doe not do it for me.

We are all entitled to our opinions Topcat and you are very welcome to yours.

Good luck

 

 

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By glynisbm
01st Aug 2011 15:16

Treasury Report
This is what happens when everything gets centralised in an attempt to save money. For example;

Centralised post room (somewhere in Liverpool I think) so post goes from London to Liverpool, gets sorted gets sent back to London.....you can see where I'm going with this can't you.

Employer end of year section - now centralised in Newcastle....apparantly they are estimating 15 weeks to deal with queries because there just aren't enough staff to deal with the issues from all over the UK.

It's about time that HMRC realised that centralising everything does not work; Graham Black (the ARC union rep) is right the cuts have gone too deep and too fast.

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By Donald2000
01st Aug 2011 15:23

Back to basics

I am also ex Revenue before it became HMRC. The answer to all these problems is to bring it back to the old district system with a PAYE allocation for each tax officer (or each tax officer higher grade) and to employ a team of inspectors on assessing the ones that the system flags up to be problem cases. Thats what used to happen; in addition there were various specialists within districts who could do what the others could not. I was one such person, being trained on repayment claims, director cases, foreign cases, as well as holding my standard specialisation of PAYE. I left because I felt the management did not respect me. 25 years later I am qualified to BA(Hons) Accounting and Diploma in English Law, as well as having done a considerable amount within commercial practice. I am now semi-retired and disgusted with what I see within HMRC.

You would have thought that really self-assessment would have put paid to all the nonsense but apparently not; why are they all so slow in inputting all the data required and messing about with payments of PAYE and collection data. This is something that all used to be done manually, except for collection data within Shipley, etc. so I dont understand whats going on now. Apart from that we used to asnwer all our own telephone calls and get all our own files from the ranges and diarise important brought forward matters.

If we dont return to an allocations systems with a proper set of officers, the whole system is going to fall apart; I would write to the Chairman of HMRC to offer to tell him how a proper system is run but I think I would find an ostrich in his office when I got to him. Really, this is just too bad.

 

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By Simon Sweetman
01st Aug 2011 15:59

same old

And the sad thing is that none of this tells us anything that we didn't know already.

It probably still makes sense to have one revenue raising body (which was not exactly a whim - the report suggested that Uganda was the only other country maintaing this separation : what did not make sense was to combine this with a ferocious level of staff cuts and an approach to the workers that suggested to them that they were worthless anyway and they certainly weren't going to be paid properly. Also the senior management became less and less likely to be people who knew anything at all about tax.

There was and may still be an ethos of public service, but successive governments have rubbished the idea in favour of adopting all the daft ideas that the private sector comes up with as if they were the revealed word.  

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By johnjenkins
01st Aug 2011 16:08

I suspect, Donald

that the staff have had enough and are probably just going through the motions. Let's face it whatever they do now is wrong. Talk to us and they get told off don't talk to us and they get crucified, they got no chance.

The answer is quite simple. Gordon Brown destroyed any normallity within HMRC so we need to go back to pre GB days. The only difference I would make is that VAT stays with Inland Revenue but Customs remains seperate ;- that doesn't stop them talking to each other.

The Government need to ask Accountants (not so-called experts) how HMRC should be structured, then we can start getting rid of all the crap. Unless someone does something drastic the situation WILL get worse.

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By SSamuel2007
01st Aug 2011 17:33

More "people investment" needed

The biggest problem with HMRC is that they employ a lot of people who do not have an accounting or tax background. They then put them on a course and then expect them to deal answer queries on the phone etc. It has never worked and it will never work.

It is the same with some VAT Inspectors, over the years I have seen them miss blinding errors as they are more interested in filing out their forms that looking at the bookkeeping.

If HMRC paid well enough and got some auditors or accountants on board then queries would be dealt with in one phone call rather than several and errors would be picked up and more taxes would be collected.

 

 

 

 

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By Top_Cat
01st Aug 2011 23:19

Personalizing the issues doe not do it for me.

We are all entitled to our opinions Topcat and you are very welcome to yours.

 

 

 

Posted by Eric Robinson on Mon, 01/08/2011 - 14:57

 

 

Sorry, but when a client gets a letter threatening him with oublic humiliation if he doesnt pay his tax (even though he doesnt even owe it) then as far as that client is concerned its very personal. 

There are cases of people committing suicide because of threats by HMRC - just how "personal" is that ? 

 

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By moufflon
01st Aug 2011 23:31

HMRC aren't the only ones at fault...

Perhaps if successive governments hadn't pursued policies designed to put thousands and thousands more people every year into higher rate tax and the world of tax returns, HMRC might have rather less workload to address...

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By Eric Robinson
02nd Aug 2011 11:11

Sweeping generalisations

 "The pompous overbearing "we are never wrong", "you are guilty until proven innocent" approach by the majority of tax officers is unacceptable".

This is clearly not correct but as I have already said, you are welcome to your opinion.

Please do not attempt to convice me that something is so when I know otherwise.

I will continue to work with professionals on both sides of the fence to make the best of a less than satisfactory situation.  

I wish you well in your efforts to do likewise.

...and there I will draw my own line under this thread.

 

 

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By mikewhit
02nd Aug 2011 11:53

"Bureaucrats" and "efficiency"

Trouble is, every government promises "efficiency savings" by cutting "bureaucrats" and "removing duplication of facilities".

So it all depends whether you think that having regional offices that can keep on top of their workload by dint of having more staff overall, who are focussed on their local clients, is "inefficient" or "cost -effective".

Sorry about quote overload, it's meant ironically to refer to what the politicians say.

But the hospitals are learning the lessons about so-called efficiency in terms of resource utilisation, versus infection control and patient outcomes, which may provide an indirect analogy.

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By Top_Cat
02nd Aug 2011 12:31

Eric Robinson

The pompous overbearing "we are never wrong", "you are guilty until proven innocent" approach by the majority of tax officers is unacceptable".

This is clearly not correct but as I have already said, you are welcome to your opinion.

 

 

 

Posted by Eric Robinson on Tue, 02/08/2011 - 11:11

 

 

Actually it is totally correct and indeed is HMRC policy.  Once an assesment is raise by HMRC it is the responsibility of the taxpayer to prove he does not owe the tax demanded, not the responsibility of HMRC to prove it is owed.

Appeal against an assessment and you will be required to prove that your figures are correct, otherwise HMRC's will stand - that is the way the legislation is written.  It flies in the face of 1,000 years of British law and in the face of Article 6 HRA.

So, my statement is in fact totally correct.

 

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By Stoanulus
04th Aug 2011 12:15

Post Delays

I find it astonishing that the Revenue takes comfort that around 60% of post is turned round in 15 days particularly as I understand that only working days are counted. A three week delay is already excessive and a two month delay is frankly totally unacceptable. The organisation has the gall to refer to their victims as 'customers'.The problem is that these customers are forced to use the only shop in town.

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Replying to mr. mischief:
Time for change
By Time for change
05th Aug 2011 11:04

Am I being cynical, or,

was this report published immediately after the "jolly hols" started for those in Westminster?

Moi, cynical, never!

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