Image source: UK Parliament, CC BY 3.0
Parliament’s Public Accounts Committee has expressed scepticism over HM Revenue and Customs’ (HMRC) plans to improve customer service by moving more enquiries to digital channels.
The observation is part of a wider criticism of HMRC’s performance in collecting taxes and duties as the UK moved out of the acute phase of the Covid-19 pandemic.
These come in the PAC’s annual report for 2021-22 on the issue, published this week.
It highlights HMRC’s emphasis on moving customers to online systems and says taxpayers have reported higher satisfaction levels with these than for telephone or postal contact. But it is not convinced this will sustainably reduce the demand for traditional channels or deal with “unacceptable” levels of service that many people are currently experiencing.
Over five years the number of customer service staff had been reduced from 25,500 to 19,500, which the PAC says is premature. While HMRC is planning to improve customer service through initiatives such as developing its digital assistant and single customer account, these are not moving fast enough to make up for the staff cuts.
Not quick enough
“The move to online services will not happen quickly and will not be appropriate for all circumstances or customers,” the report says.
The committee has raised concerns that taxpayers are being forced to interact with HMRC online and that many are unable to do so. In response, the department has expressed a belief there is a lot of “low value demand” from taxpayers that can be removed through better processes and self-service.
The report adds that HMRC’s ability to understand debtors’ circumstances will be limited until it has completed its single customer account project, which will join up taxpayers’ records currently held in different digital systems.
More broadly, the PAC says that, while HMRC collected £731.1 billion in 2021-22, the highest on record, it is still not deploying the resources required to maximise revenue or provide an acceptable level of customer service.
It says the department lacks the ambition to tackle fraud and error and recover losses. It only expects to recover around a quarter of the estimated £4.5 billion lost in its Covid-19 support schemes, and there are persistent problems in recovering fraud and error losses from its research and development tax relief and VAT compliance.
Problems with VAT’s susceptibility to fraud appear to be better managed elsewhere in Europe, the committee says.
Eye watering debt
Commenting on the overall situation, PAC chair Dame Meg Hillier MP said: “The eye watering £42 billion now owed to HMRC in unpaid taxes would have filled a lot of this year’s infamous public spending black hole. But the public purse will continue missing out on billions of desperately needed revenues as HMRC will only employ more staff to tackle compliance over the next few years – that’s not fast enough to dent the tax gap at a time of huge public sector spending pressures. Meanwhile taxpayers battle customer services that need improvement.
“The PAC has reported on the many problems in the Covid support schemes that made an open goal for fraudsters, but HMRC is settling for trying to recover less than a quarter of estimated losses in schemes such as furlough. We recognise the problems HMRC faces - due to poor controls, the horse has bolted - but we believe there is a moral duty to pursue fraud. HMRC must ensure dishonesty is not seen to create advantage.”