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HM Revenue & Customs’ customer service is at an “all-time low” and the tax authority is “struggling to cope” with rising numbers of taxpayers and increases in complexity, a cross-party group of MPs has warned.
In a report published on Wednesday, the Public Accounts Committee criticised the UK tax authority for a five-year decline in its customer service levels. The poor performance had continued since the MPs’ report last year which, at the time, described HMRC’s customer service as “unacceptable”.
The latest report found it took on average 16.24 minutes in 2022–23 for HMRC agents to answer the phone, up from 12.22 minutes in 2021–22. Meanwhile, 62.7 per cent of callers waited more than 10 minutes to speak to an adviser, up from 46.3 per cent in 2021–22.
“We are disappointed that services have continued to deteriorate since our last report,” the committee said. HMRC restricted use of its helpline for the public in December 2023 and January 2024.
The committee said it had received an unprecedented number of written submissions about HMRC’s performance “demonstrating the extent of taxpayers’ exasperation over the quality of services and the impact on businesses”.
“As the taxpayer population increases, along with the complexity of their tax affairs, it looks like HMRC is struggling to cope,” the report said.
Demand for the tax authority’s phone and post services was increasing by more than 10 per cent a year, the report found, driven by rises in the number of people paying tax and the complexity of their tax affairs.
The impact of a freeze on many personal tax thresholds over the past few years was also resulting in more and more people paying tax and at higher levels, it added.
The government froze the personal allowance and other tax thresholds in March 2021 when Prime Minister Rishi Sunak was chancellor. Freezing thresholds, rather than raising them in line with inflation, increases tax receipts as rising wages and asset values tip ever greater numbers of people into the tax system or on to higher rates, a phenomenon known as “fiscal drag”.
The thresholds freeze was originally intended to run from April 2022 to April 2026 but was extended to 2028 after Jeremy Hunt took over as chancellor following the “mini-Budget” under Prime Minister Liz Truss.
MPs on the PAC committee also said HMRC “does not have the resources to meet this demand at expected service standards”. Instead, the tax office was telling callers to use its digital services where they are available and redirecting them to online guidance. It had also restricted its self-assessment helpline ahead of the January 31 filing deadline, the busiest time of the year.
“HMRC insists it has good-quality digital services for customers to manage their taxes but this is not the experience shared by the taxpayers and their agents that got in touch with us,” the PAC report added.
The MPs also took the tax office to task for a “significant” drop in the number of criminal prosecutions secured. These had fallen from 691 in 2019-20 to 240 in 2022-23. Fewer criminals being prosecuted risked sending the wrong message, the committee warned. Meanwhile, MPs expressed concern that HMRC’s approach to policing the off-payroll working rules, known as IR35 rules, were “deterring legitimate economic activity”.
“We are concerned that a lack of confidence in how to apply the rules, together with HMRC’s tough approach when taxpayers make mistakes, is deterring companies from using contractors unnecessarily,” the report said.
HMRC said: “We’re making strong progress improving our customer services, with a focus on encouraging people to deal with us online where they can, by providing quicker, easier and always available digital services. Millions more people used our highly-rated online services last year.”
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