New funding to support HMRC helplines
By Susan Cattell, Head of Tax Technical Policy
17 May 2024
We review the government’s announcement of additional funding for HMRC to support its helplines.
On 19 March HMRC announced major reductions in service on several key helplines, including the closure of the self-assessment helpline between April and September and the closure of the VAT helpline (other than on five days per month). The intention was to force more taxpayers to use digital services, instead of calling HMRC.
In a major U-turn 24 hours later, following widespread criticism, HMRC reversed the planned closures. HMRC’s Chief Executive Jim Harra said that HMRC had listened to feedback and acknowledged that the pace of the change to digital services needs to match the public appetite for managing their tax affairs online.
We welcomed the reversal of the closures, commenting that HMRC needs to do more work to ensure its digital options work effectively for taxpayers and agents before helpline services are reduced or closed down. However, members will be well aware that there are long waiting times on HMRC helplines, and it is sometimes impossible to get through, so the reversal of the changes left HMRC facing considerable challenges.
In a report about HMRC’s customer service, published on 15 May, the National Audit Office (NAO) noted that HMRC felt it had no choice but to close phone lines because it couldn’t deal with telephone demand and had fallen short in processing correspondence as a result. Funding pressures and attempts to reduce costs meant that HMRC and its customers have been caught in a declining spiral of service pressures and cuts.
New funding for HMRC
On 13 May the Financial Secretary to the Treasury announced that the government was providing HMRC with £51 million in new funding to bring HMRC’s phone line service back up to the published target of 85% of calls to HMRC advisers being answered.
The statement went on to say that the additional funding “enables HMRC to meet the performance standards on its phone lines that its customers expect, while continuing the transition to a digital first model of tax administration.”
Is it enough to make a difference?
We regularly call for the government to ensure that HMRC has adequate resources to maintain acceptable service levels, so we welcome the announcement. However, the NAO report points out that in 2022/23 HMRC spent £881 million on customer service - £51 million is not a significant amount set against that total level of expenditure.
The NAO also noted that in 2022/23 the government increased HMRC’s efficiency targets further, as part of efforts to manage the pressure of inflation on public spending. At the start of 2024/25 HMRC needed to reduce its overall customer service workforce by 14% to stay within its budget. It had only achieved a 9% reduction between 2029/20 and 2023/24, and over that period its performance dealing with calls significantly worsened. Illustrating the deterioration, the NAO highlighted that HMRC’s customers spent the equivalent of 798 years (7.0 million hours) in 2022-23 waiting to speak to an adviser, up from 365 years (3.2 million hours) in 2019-20.
We assume the additional £51 million will help to keep some helpline services running in the short term, although it seems likely that there will still be lengthy waiting times. It is therefore vital that HMRC does improve and expand its digital services, to reduce the numbers of taxpayers and agents who need to call HMRC.
Moving to digital channels
The NAO examined some of the steps HMRC has already taken to try to increase the use of digital options. Whilst there have been some successes and use of digital services has increased, there remain considerable problems.
The NAO highlights a lack of awareness of digital services. Looking at HMRC’s most recent data from November 2022, only 29% of customers were aware of the Personal Tax Account (PTA) or the Business Tax Account and only 21% of taxpayers were aware of the HMRC app.
The NAO also found that HMRC’s digital services are better suited to straightforward queries and reporting changes in customer circumstances. It identified gaps in what individuals can do online. NAO testing of HMRC’s digital assistant found approximately half the queries sampled would need contact with an adviser to resolve them. HMRC’s latest (2022) customer survey covering individuals found that of those who interacted with HMRC by telephone and online, 69% had telephoned HMRC because they couldn’t resolve their issue online.
Last year when HMRC reduced service levels on the Agent Dedicated Line, it said that it was looking at possible improvements to the digital options for agents. It is essential that HMRC does ensure that comprehensive digital services are available for agents, who would generally prefer to use online services, rather than waiting on helplines.
We provide feedback to HMRC on areas where digital services for agents and taxpayers need to be improved, including giving agents the ability to amend clients’ PAYE codes online, enabling the correction of P800s via the PTA and a digital mechanism for providing IHT information. We welcome additional suggestions from members – email tax@icas.com with your thoughts.
