Recommendations & Conclusions
12 items
3
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
HMRC has been too willing to let its telephone services fail in the hope this forces people to use its digital services instead. HMRC estimates 66% of calls it receives could be handled online instead. It hopes that by encouraging customers to use digital services it can free up its …
Read more
HMRC has been too willing to let its telephone services fail in the hope this forces people to use its digital services instead. HMRC estimates 66% of calls it receives could be handled online instead. It hopes that by encouraging customers to use digital services it can free up its helplines for vulnerable customers and customers with complex affairs who need to speak to an adviser. However, not all services are available online, and where they are available they do not always provide the reassurance that customers need. HMRC has been too quick to restrict access to its telephone services before ensuring replacement digital services are fully in place. In 2023, it trialled some helpline closures with only two days’ notice to taxpayers, and reversed a decision to close them permanently from April 2024 following criticism from stakeholders. HMRC said it recognises that not everybody can go online and that vulnerable customers may need additional support. It has increased the number of staff supporting vulnerable customers by 20% and has provided £5.5 million additional funding to community and voluntary organisations. recommendation HMRC should ensure it understands how far its digital services can replace telephone services and what level of telephone service it needs to retain to meet customers’ needs - including those of small businesses. HMRC should ensure it meets a minimum level of service for all customers, including those 7 million customers HMRC estimates can’t use digital services. 4
Show less
Government response AI summary
The government states it has expanded Extra Support teams and funded community organisations, and will publish a Transformation Roadmap in 2025 outlining plans to extend digital services, ensure digital inclusion, and support customers who cannot interact digitally.
Read full response →
HM Treasury
5
Recommendation
3rd Report - HMRC Customer Service and…
Accepted
HMRC’s investment in debt management has not sufficiently reduced the amount of tax owed to it. In 2023–24, the government announced £303 million additional funding for HMRC to improve its capacity to manage tax debts. This followed £47.2 million announced in 2022–23. Despite this investment, the tax debt balance fell …
Read more
HMRC’s investment in debt management has not sufficiently reduced the amount of tax owed to it. In 2023–24, the government announced £303 million additional funding for HMRC to improve its capacity to manage tax debts. This followed £47.2 million announced in 2022–23. Despite this investment, the tax debt balance fell only marginally in 2023–24, from £43.9 billion at 31 March 2023 to £43.0 billion at 31 March 2024. This is still much higher than the five years before the pandemic, where tax debt was typically around £15 billion. HMRC is still seeing high levels of new tax debt, largely driven by small businesses’ cash flow issues. HMRC says its efforts are focused on pursuing these new debts, which are easier to collect. We are concerned, though, that HMRC is not effectively pursuing older debts. It has estimated it may not be able to collect 45% of established taxpayer liabilities not yet received. In 2023–24, HMRC wrote off £5.0 billion of debts as uncollectable, an increase from £3.2 billion in 2022–23. HMRC expects the amount of write-offs to remain high in 2024–25 as the impact of the pandemic on insolvencies continues to work its way through the criminal justice and tax systems. In the 2024 Autumn Budget, HMRC received funding for 1,800 more debt management staff. 5 recommendation Now that HMRC has secured even more resources to manage the debts owed to it, it should set out what reduction in the debt balance it is aiming for and by what date, and a plan for how it will recover older debts before they become uncollectable.
Show less
Government response AI summary
The government commits to responding to the Committee by September 2025, outlining its expectations for the tax debt balance by 2029-30 and plans for recovering older debts.
Read full response →
HM Treasury
6
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
We welcome HMRC’s new goal to reduce the tax gap but we are concerned that it still plans to reduce the number of prosecutions. HMRC expects to bring in £6.5 billion additional tax revenue by 2029–30 as a result of measures set out at the Autumn Budget 2024, and has …
Read more
We welcome HMRC’s new goal to reduce the tax gap but we are concerned that it still plans to reduce the number of prosecutions. HMRC expects to bring in £6.5 billion additional tax revenue by 2029–30 as a result of measures set out at the Autumn Budget 2024, and has funding for 5,000 additional compliance officers. However, it could not tell us how much this will reduce the tax gap. HMRC has published experimental statistics on the offshore tax gap, but admits this is not a complete measure. At £0.3 billion we are concerned HMRC’s estimate looks implausibly low and that there is no way of making an accurate estimate. We are also concerned that HMRC is not doing enough to tackle deliberate cases of non-compliance. HMRC can use civil processes to sanction non-compliance, but its use of criminal investigation and prosecution is decreasing, and there were only 344 criminal prosecutions in 2023–24, compared with 691 in 2019–20, with HMRC focusing on the most serious and high-value cases. We are concerned that HMRC is not using the criminal enforcement tools at its disposal. There have never been any prosecutions under the criminal facilitation of tax evasion offence. The number of HMRC investigations into serious tax fraud and avoidance has fallen to a six-year low. HMRC is examining the deterrent effect of criminal investigations and prosecutions to understand their effectiveness in recovering tax. recommendation Now that HMRC has been tasked with reducing rather than just maintaining the tax gap, it must be bolder in identifying and tackling abuse. HMRC should: a. set ambitious targets for compliance yield that would allow it to achieve annual reductions in the tax gap; b. obtain an estimate that is as accurate as feasibly and practically possible of the offshore tax gap and develop a standalone strategy to reduce it; and c. research which interventions are most effective in achieving a deterrent effect for tax evaders and organised criminals. This research should expl
Show less
Government response AI summary
The government agrees with the recommendation, stating it will increase counter-fraud capability and publish an updated Issue Brief detailing its ambitions to address fraud and its increased effectiveness through civil and criminal powers, also committing to publish a target for charging decisions in due course.
Read full response →
HM Treasury
1
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) on its performance in 2023– 24 and its customer service.1
Government response AI summary
The government states it is actively exploring the use of callbacks and will launch procurement for a new Contact Service platform in spring 2025, aiming for it to be in place by 2026-27.
Read full response →
HM Treasury
7
Recommendation
3rd Report - HMRC Customer Service and…
Accepted
We asked whether HMRC provides customers with information on expected call waiting times. It said it provides this information on many of its helplines, but the information is limited to the average call waiting time from the previous day rather than a current waiting time. HMRC explained this was another …
Read more
We asked whether HMRC provides customers with information on expected call waiting times. It said it provides this information on many of its helplines, but the information is limited to the average call waiting time from the previous day rather than a current waiting time. HMRC explained this was another limitation of its telephone platform.12 4 Customer service, paras 3, 12 5 Customer service, para 1.5 6 Report on 2023–24 Accounts, para 8; Customer service, para 4 7 HMRC Customer Service and Accounts 2023–24 - Written evidence - Committees - UK Parliament 8 Customer service, para 1.9 9 Q 51 10 Q 54 11 Q 58 12 Qq 57, 67-68 8 Resources for meeting customer demand on the telephone
Show less
Government response AI summary
HMRC will procure a new Contact Service platform in Spring 2025 to be in place in 2026-27, that gives customers an indication of likely wait time and call back options.
Read full response →
HM Treasury
8
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
HMRC has been working to become a ‘digital-first’ organisation since 2010 and hopes to replace traditional forms of contact with digital services.13 It said its research shows that 86% of customers say they are willing to deal with HMRC digitally or would prefer to do so.14 Despite this, HMRC still …
Read more
HMRC has been working to become a ‘digital-first’ organisation since 2010 and hopes to replace traditional forms of contact with digital services.13 It said its research shows that 86% of customers say they are willing to deal with HMRC digitally or would prefer to do so.14 Despite this, HMRC still received 36.7 million telephone calls in 2023–24.15 It said it will be publishing a digital services roadmap in Spring 2025 to set out the digital services it is expecting to develop and the investment it needs.16
Show less
Government response AI summary
The government agreed with the committee's recommendation to consider HMRC's resourcing as part of the Spending Review to further digitise customer services and enable more customers to self-serve online, and will publish a Transformation Roadmap in 2025 outlining plans to extend digital services and provide …
Read full response →
HM Treasury
10
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
In May 2024, HMRC received £51 million additional funding, to cover approximately 1,500 staff for 2024–25, to bring its customer service to target levels for answering 85% of customers’ attempts to speak to an adviser on the telephone and for handling 80% of correspondence within 15 working days.19 It said …
Read more
In May 2024, HMRC received £51 million additional funding, to cover approximately 1,500 staff for 2024–25, to bring its customer service to target levels for answering 85% of customers’ attempts to speak to an adviser on the telephone and for handling 80% of correspondence within 15 working days.19 It said it achieved its target for telephone performance in October 2024 and expects to sustain it for the remainder of 2024–25 and for 2025– 26.20 13 Customer service, paras 21, 2.1 14 Q 73 15 Customer service, para 1.24 16 Q 74 17 Q 81 18 Q 12 19 Report on 2023–24 Accounts, para 9 20 Q 48 9 2 Moving customers to digital services Developing effective digital services
Show less
Government response AI summary
The government agreed with the committee's recommendation to consider HMRC's resourcing as part of the Spending Review to further digitise customer services and enable more customers to self-serve online, and will publish a Transformation Roadmap in 2025 outlining plans to extend digital services and provide …
Read full response →
HM Treasury
11
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
HMRC said that approximately 70% of interactions with it are digital.21 Since 2015, it has introduced several digital services, including Personal and Business Tax Accounts, an app, and its flagship Making Tax Digital programme for VAT.22 In 2022–23, customers accessed online Personal and Business Tax Accounts and the HMRC app …
Read more
HMRC said that approximately 70% of interactions with it are digital.21 Since 2015, it has introduced several digital services, including Personal and Business Tax Accounts, an app, and its flagship Making Tax Digital programme for VAT.22 In 2022–23, customers accessed online Personal and Business Tax Accounts and the HMRC app 199 million times, up from 62 million in 2016–17.23 HMRC said that in many instances digital services provide very high satisfaction rates.24 In 2023–24, 83.1% of customers surveyed reported they were satisfied after using a digital service.25
Show less
Government response AI summary
The government agreed with the committee's recommendation to consider HMRC's resourcing as part of the Spending Review to further digitise customer services and enable more customers to self-serve online, and will publish a Transformation Roadmap in 2025 outlining plans to extend digital services and provide …
Read full response →
HM Treasury
14
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
HMRC received 22 million items of correspondence in 2022–23, including physical post and forms and interactive forms.37 Around 70% of correspondence comes in through the post. To process postal correspondence, as well as some electronic correspondence, HMRC must scan or manually enter the information into its systems, or both.38 HMRC …
Read more
HMRC received 22 million items of correspondence in 2022–23, including physical post and forms and interactive forms.37 Around 70% of correspondence comes in through the post. To process postal correspondence, as well as some electronic correspondence, HMRC must scan or manually enter the information into its systems, or both.38 HMRC has not met an annual performance target for processing correspondence since 2018–19.39 In 2023–24, HMRC cleared 76.3% of correspondence within 15 working days, up from 45.5% in 2021–22 but still below its target of 80%.40 In 2022–23, HMRC spent £68 million on postage and print costs.41
Show less
Government response AI summary
HMRC states it has made significant progress in telephony and correspondence service performance during 2024-25, and government funding for 2025-26 will enable it to maintain these service standards.
Read full response →
HM Treasury
19
Conclusion
3rd Report - HMRC Customer Service and…
Accepted
HMRC estimates that the tax gap–the difference between the amount of tax that should be paid to HMRC, and what was actually paid–increased from £38.1 billion in 2021–22 to £39.8 billion in 2022–23 (the latest year for which HMRC has made an estimate). As a proportion of tax due, it …
Read more
HMRC estimates that the tax gap–the difference between the amount of tax that should be paid to HMRC, and what was actually paid–increased from £38.1 billion in 2021–22 to £39.8 billion in 2022–23 (the latest year for which HMRC has made an estimate). As a proportion of tax due, it decreased from 5.2% to 4.8%.56 HMRC has been given additional resources to bring in more tax revenue and reduce the tax gap further. In the Autumn Budget 2024 it was given funding for 5,000 additional compliance officers and it expects the measures set out will bring in approximately £6.5 billion additional tax revenues by 2029–30.57 It said additional staff will focus on tackling non- compliance among small businesses, who made up 60% of the tax gap in 2022–23, up from 37% in 2017–18.58 HMRC said these staff will initially be used to respond and investigate where taxpayers make mistakes or avoid or evade tax, although HMRC said tackling non-compliance among small businesses in this way is challenging given the large number of cases.59
Show less
Government response AI summary
HMRC will set stretching annual compliance yield targets with Ministers, including the expected £6.5 billion in 2029-30 from measures announced at Autumn Budget 2024.
Read full response →
HM Treasury
20
Recommendation
3rd Report - HMRC Customer Service and…
Accepted
HMRC was unable to say what impact the additional revenues it expects to bring in would have on the tax gap. It said it is not practical to set a target for the tax gap as it is measured more than a year after the end of the tax year …
Read more
HMRC was unable to say what impact the additional revenues it expects to bring in would have on the tax gap. It said it is not practical to set a target for the tax gap as it is measured more than a year after the end of the tax year and is then subject to revisions as more data become available. Instead, HMRC said its operational target was an annual target for compliance yield which, if delivered, should in turn reduce the tax gap, once that is also measured. 60 HMRC said this operational target for compliance yield, set at £45.5 billion for 2024–25, is stretching but that it hopes to achieve it.61
Show less
Government response AI summary
HMRC will set stretching annual compliance yield targets with Ministers, including expected additional tax revenue from measures announced at Autumn Budget 2024, estimated to generate £6.5 billion in 2029-30.
Read full response →
HM Treasury
22
Recommendation
3rd Report - HMRC Customer Service and…
Accepted
In 2023–24 there were 344 criminal prosecutions, compared with 691 in 2019–20, before the pandemic.64 HMRC said it is very successful in its criminal investigations and has a high conviction rate in its prosecutions, but that it tends to reserve their use for the most serious and higher- value cases …
Read more
In 2023–24 there were 344 criminal prosecutions, compared with 691 in 2019–20, before the pandemic.64 HMRC said it is very successful in its criminal investigations and has a high conviction rate in its prosecutions, but that it tends to reserve their use for the most serious and higher- value cases 65 We asked HMRC whether failing to prosecute some criminal behaviour reduces the deterrent effect of HMRC’s criminal investigations and leads to a culture of non-compliance.66 HMRC accepted there was a risk that the deterrent effect could reduce.67 It said it was reviewing the academic research on this topic but said there was currently limited evidence about the deterrent effect of criminal investigation and prosecution, but that it could still impose significant sanctions using civil processes.68 63 Q 23 64 Report on 2023–24 Accounts, para 1.22 65 Qq 30, 39-40 66 Q 31 67 Q 31 68 Q 31 15
Show less
Government response AI summary
HMRC will increase counter-fraud capability and expand work to address fraud, publishing an updated Issue Brief articulating its ambitions and areas of likely focus, and considering the associated uplift in positive charging decisions.
Read full response →
HM Treasury