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HMRC misjudged digital transition, says NAO



Government auditor reports that department reduced telephone resources too quickly and increased costs for customers

HM Revenue & Customs (HMRC) has been over-optimistic about customers’ willingness to drop traditional contact channels in favour of digital services, leading to a collapse in the quality of service over a two-year period, according to the National Audit Office (NAO).

Its new report on the issue says that, while the department invested heavily in automated telephony and paperless self-assessment, many people have still felt the need for one-to-one telephone advice – even though there has been a large cut in the number of staff available to provide it.

Between 2010-15 HMRC reduced the number of staff working on personal tax from 26,000 to 15,000, alongside an increase in the automation of its PAYE systems, believing that customers would move to the less expensive digital contact channels.

But with people continuing to use the phone for direct support, the proportion of call attempts handled fell to 71% and the target of handling 80% was met in only 10 weeks of 2014-15. In the first seven months of 2015-16 things became worse, with a tripling of the average waiting time for a response, peaking at 47 minutes for self-assessment callers in the deadline week for paper returns last October.

The performance has only improved since the recruitment of 2,400 staff to work on the tax helpline in autumn of last year. Call waiting times had been reduced to an average of five minutes for self-assessment during deadline week in January.

Discrepancy build-up

There have also been problems in the stock of outstanding discrepancies on tax records requiring investigation, which rose from 2.4 million in March 2014 to 4.6 million in March 2015. Again, it took the recruitment of extra staff to reduce the problem, bringing the number below 3 million by last December.

According to an NAO estimate, overall costs for customers calling the tax helpline increased from £63 million in 2012-13 to £97 million in 2015-16. While their call costs were reduced by HMRC moving to local rate 03 telephone numbers in September 2013, the increased cost for customers was £4 for every £1 saved by the department.

About one in five customers rated HMRC’s services as being poor or terrible, but satisfaction was highest among those whose recent contact had been online.

The customer survey also revealed that those with a more positive experience were more likely to think that tax evasion was unacceptable, and that evaders would be detected.

Bad timing

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

“HMRC needs to move forward carefully and get their strategy back on track while maintaining, and hopefully improving, service standards.”

Pictured: HMRC 2 by Paul Clarke © |

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