Wilkins Southworth

Accountancy bodies critical of HMRC service levels

There is growing frustration and concern amongst the accountancy community about the level of service provided by HMRC. This came to a head on 1st March 2023 when an open letter signed by ten accountancy bodies was sent to the Chancellor of the Exchequer, Jeremy Hunt. After years of unrest, more recent changes to HMRC working practices and staffing levels are compromising the activities of accountancy practices up and down the UK.

Recent HMRC service performance statistics

The quarterly performance update for October to December 2022 highlighted the challenges facing HMRC customer services. During this period, we know that:-

  • 71% of customer correspondence (in this case from April to December) was turned around within 15 days, less than the 80% service standard
  • 75% of customers requiring telephone assistance were able to speak to an adviser, against a target of 85%
  • The average waiting time was just under 15 minutes, approaching three times the target service standard

We can only guess how many phone calls were terminated before speaking to a customer service representative!

These are damning statistics, although many accountants would argue that these issues have been brewing for some time. There has been a gradual decline in service standards in recent years, followed by a steep decline of late. We await the next HMRC update with trepidation; bearing in mind it will include the run-up to 31st January, the deadline for filing tax returns. Consequently, it is improbable we will see any improvement!

Reduced staffing levels

As a government department, HMRC must provide regular updates concerning taxes collected, staffing levels and investment going forward. Consequently, it was revealed that the critical customer services division had seen a 24% reduction in staffing numbers over the last five years. In real terms, staffing levels have fallen from 25,500 to 19,500, corresponding with a significant deterioration in performance levels.

The government has also confirmed that during times of high demand, HMRC has been forced to close telephone lines. This has caused frustration for accountants and taxpayers, many of whom have genuine issues that cannot be addressed online and require the assistance of experienced customer service personnel.

Transferring staff away from customer services

Due to Brexit and Covid-related HMRC initiatives, we have seen significant numbers of employees transferred to other departments, such as the new Taxpayer Protection Taskforce. While the government was actively looking to recruit 1200 tax investigators for this new body, at the same time, 2300 HMRC employees were transferred away from other departments.

In many ways, the Taxpayer Protection Taskforce supports the claims of mismanagement within HMRC. This body was created in 2021 when the government announced a £100 million investment. Initially focused on estimated Covid-related fraudulent losses of £4.5 billion, the task force is only expected to recoup around £1.1 billion, less than 25% of estimated losses.

Statistics also show the return on investment per full-time employee equates to just £250,000 for each member of the Taxpayer Protection Taskforce. This compares to a £1.3 million average return per person carrying out “traditional” HMRC services. So it is no surprise that the task force is quietly being wound down and will eventually be closed.

Is the HMRC work-from-home policy partly to blame?

While the official line from HMRC suggests that the department’s work-from-home policy is not impacting service levels, many would disagree. For example, HMRC regularly posts the lowest daily average staffing turnout of all government departments.

The hybrid working model means employees are only obliged to be in the office two to three days per week. Consequently, many customer service calls are being taken at home. Amid concerns that it can be difficult to obtain quick advice from colleagues, there are also reports of calls being cut-off.

This policy was introduced as a means of stemming the outflow of staff leaving HMRC due to issues such as:-

  • Working conditions
  • Wages
  • Workplace stress
  • Low staff morale
  • IT system issues

While part of a modern-day trend in the workplace, this has exacerbated the ongoing problem of falling customer service performance statistics.

What is HMRC doing to address failing customer service standards?

As you might expect, there are currently several ongoing initiatives the government hopes will eventually lead to improved HMRC customer service levels. These include:-

Auto text system

While neither new nor cutting-edge, HMRC recently trialled automated texting technology. The text message will still be triggered by a telephone call, with routine requests answered with a text and a website link. The service included activities such as:-

  • Locating Unique Taxpayer Reference (UTR) numbers
  • Registering for HMRC online services
  • Resetting lost passwords/ID

If successful, the number of services will likely be extended to leave phone lines free for those requiring telephone assistance. With an estimated 170,000 calls received in the run-up to the last self-assessment tax return deadline, even a 10% reduction would likely lead to improved service statistics.

HMRC Academy launch

The launch of an HMRC internal academy will prompt a mixed reaction from the financial community. While it is a valuable means of educating staff and maximising their value and skills as we advance, it isn’t easy to see any real short-term benefits. This was accompanied by news that HMRC IT spending has increased from £80 million-£150 million over the last five years.

These long-term initiatives will do little but divert much-needed short term investment away from the core customer service operations.

Annual leave selling scheme

The option for employees to sell up to 5 days of their annual leave has been under consideration since 2019. However, it was only recently confirmed with a limited-time trial launched.

Already there are concerns that staff members on minimum wage may be forced to use the scheme to raise much-needed funds. Unfortunately, reduced time away from the office will likely lead to increased stress amid concerns for long-term mental health. It is difficult to understand how encouraging already stressed staff to give up part of their annual leave will help improve low staff morale.

Is there light at the end of the tunnel?

While there will likely be an influx of staff transferred back to their original roles with the demise of the Taxpayer Protection Taskforce, some of this benefit will be reduced as people continue to leave the civil service. Introducing new technology is welcomed, but we have been here before, rarely do these initiatives deliver on their initial promises.

Ironically, for a department which deals in often complex tax calculations, there is one outstanding statistic. Due to staff shortages, there was a £6 billion shortfall in tax recovery in the 2021/22 tax year compared to 2019/20. As this issue has worsened in recent months, this figure will likely increase. Adding to an estimated £42 billion lost to genuine errors on tax returns, therefore relatively easily recovered, which has built up in recent years.


Chris Wilkins FCCA is a Chartered Certified Accountant, Registered Auditor and the managing partner of Wilkins Southworth based in Barnes, South West London

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