Recommendation 7

HMRC has recently increased its use of external agencies.18 In 2022–23 it spent £34.0 million on agencies to recover tax debt, up from £20.6 million in 2021–22.19 A new contract 9 Q 31 10 Q 83 11 Qq 84–85 12 Q 83 13 HMRCSR0007 Institute of Chartered Accountants in England and Wales; HMRCSR0009 Association of Taxation Technicians; HMRCSR0015 Chartered Institute of Taxation; HMRCSR0017 Low Incomes Tax Reform Group 14 Qq 87, 89–90 15 Q 37 16 C&AG’s Report, para 7 17 Qq 37, 38 18 Q 36 19 C&AG’s Report, para 1.14 10 HMRC performance in 2022–23 with these agencies from September 2022 means the rate of return that HMRC gets from this spending has improved, from £23 of debt recovered for every £1 spent to £32 for every £1 spent.20 HMRC said it has long-standing relationships with some of the agencies, which has allowed it to streamline the processes and help the agencies to be more effective. We asked HMRC about the accountability arrangements for these agencies. HMRC told us that they are all part of a Government framework and regulated by the Financial Conduct Authority and that HMRC agrees and oversees the letters and the processes that they follow.21 HMRC said that customers wishing to make a complaint about how they have been treated by an agency working on behalf of HMRC would do so through HMRC’s complaints procedures.22 However, we noted that in June 2023 the Adjudicator’s Office reported concerns with HMRC’s complaints procedures, with significant backlogs and increasing numbers of customers receiving no or little meaningful response from HMRC for long periods of time. HMRC said that the number of complaints has been increasing, mainly down to the time taken by HMRC to respond to queries, and that it is increasing its resources for complaints management.23