National Audit Office publishes findings on HMRC

The National Audit Office has published a 59-page document (downloads as PDF) detailing the results of its report on the quality of service given to taxpayers by HM Revenue & Customs (HMRC). The report and its summary cover HMRC’s services to personal taxpayers and consider how these services have changed between 2010-11 and 2014-15.

During this period, HMRC sought to reduce its costs while still maintaining an effective and valuable level of customer service.

What did HMCR Change?

In keeping with most government departments, HMRC has been given the challenge of reducing its costs, a task it began in 2010-11. This included cutting some jobs in favour of paperless self-assessment or automated telephone systems, restructuring some resources and priorities, increasing automation of the PAYE system and improving the flexibility of staff in terms of the roles they could perform. Some of these changes have been more successful than others.

As well as covering HMRC’s services in its report, the National Audit Office also made a number of recommendations to HMRC, laying out expectations for future changes. These recommendations covered a variety of areas and suggested, among other things, that future spending changes should be assessed more carefully and that there should be greater transparency for taxpayers.

Key Findings About HMRC From the Survey

The report investigated whether HMRC had successfully managed to reduce costs while maintaining its level of customer service and the key findings were:

  • HMRC reduced the cost of its personal tax operations by £257m between 2010-11 and 2014-15, exceeding its agreed saving of £193m set in the 2010 spending review.
  • Up to 2013-14, the level of customer service was maintained or improved. However, HMRC then misjudged the impact of its changes and transitions when too many customer services staff had their jobs cut before changes to customer services were fully complete.
  • Service quality then deteriorated in 2015 following the impact of the staff reductions. Calls handled fell from 79% in 2013-14 to 71% in 2015. Average waiting times tripled, reaching a high of 34 minutes in October 2015.
  • As a result of staff moves and shortages, there were 3.2 million high priority cases left as outstanding discrepancies in March 2015. These included a risk that employees paid an incorrect amount of tax.
  • However, after HMRC recruited an extra 2,400 staff in the second half of 2015-16, performance improved. The number of unresolved tax discrepancies fell from 4.6 million in March 2015 to below 3 million by December 2015. Of these, less than half were high priority.

Key Findings About Personal Tax Customers From the Survey

As well as investigating the proficiency of HMRC, the National Audit Office also looked into the impact of HMRC’s changes on personal tax customers. Some of its key findings included:

  • One in five customers rated HMRC’s customer services as poor, but most were satisfied with 58% rating the service as good or excellent. Satisfaction was highest for online interactions and lowest for phone interactions.
  • Demand for tax help from the voluntary sector has risen as HMRC’s services have become harder to access. In 2008-9, 75% said it was easy to get in touch with HMRC, whereas this number was 58% in 2014-15.
  • As a result of longer phone waiting times, it is estimated that the cost incurred by customers who have called the taxes helpline was £97m. This is a 54% increase from 2012-13, when the figure was £63m.
  • No link has been found to suggest that the lower quality of customer service has led to lower tax revenue.

Conclusions

The National Audit Office concluded that HMRC had managed overall to offer value for money by relatively maintaining its level of customer service while reducing its costs. It also noted that the move to automated and online services would likely lead to a more efficient and less costly system in the long-run, thereby saving taxpayers’ time and money.

HMRC’s digitisation strategy is set to be complete by 2020-21, potentially having a significant impact on the reporting of tax and subsequent revenue.

References

https://www.nao.org.uk/wp-content/uploads/2016/05/The-quality-of-service-for-personal-taxpayers.pdf

https://www.nao.org.uk/wp-content/uploads/2016/05/The-quality-of-service-for-personal-taxpayers-Summary.pdf

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