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HMRC slammed for "collapse of service" after cuts

A National Audit Office investigation has concluded that HMRC's decision to cut staff in 2014 led to a "collapse" in the quality of its service to personal taxpayers and those enquiring about self-assessment.

The cuts to staff were made as HMRC introduced a new digital strategy; however the introduction of online tax returns did not result in a reduction of calls to HMRC helplines. As a result, average call waiting times tripled in 2014/2015.

Amyas Morse, Head of the National Audit Office (NAO), said that HMRC had "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."

The NAO estimates that the overall cost incurred by customers who called the HMRC helpline (including phone costs and time) increased from £63 million in 2012-13 to £97 million in 2015-16.

John Cullinane, Tax Policy Director at the Chartered Institute of Taxation (CIOT), said: 

"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 … are actually being delivered. If the mandatory quarterly tax reporting by business and the self-employed that the Government says it will propose includes anything more than simple information readily available to all taxpayers then it is likely to add to the burden on HMRC's helplines. People may start to call HMRC four times a year for advice and guidance rather than just once."

The NAO says HMRC customer service has subsequently improved following the recruitment of additional staff. However, a recent poll of sole traders by accountants Crunch found that:

  • 56% of UK freelancers hang up before being put through to HMRC;
  • 38% don't phone HMRC due to the expected waiting time;
  • 15% spend between 60-120 minutes on hold to HMRC.

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