Source · Select Committees · Public Accounts Committee
3rd Report - HMRC Customer Service and Accounts
Public Accounts Committee
HC 347
Published 22 January 2025
Recommendations
2
Rejected
Allocate sufficient resources to HMRC customer service and establish service level guard rails.
Recommendation
HMRC’s digital services have not sufficiently reduced demand on the phone and HMRC has failed to prioritise the resources needed to sustain an appropriate standard of telephone service. HMRC has been working to become a ‘digital-first’ organisation since 2010 and …
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Government Response Summary
The government rejects the recommendation, stating it already proactively reviews and adjusts resourcing levels daily and weekly, and continuously discusses performance and resource needs with HM Treasury and ministers.
HM Treasury
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5
Accepted
Set out debt balance reduction targets and a plan for recovering older uncollectable debts.
Recommendation
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 …
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Government Response 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.
HM Treasury
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7
Accepted
HMRC provides limited and delayed information on customer telephone waiting times.
Recommendation
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 …
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Government Response 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.
HM Treasury
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12
Acknowledged
Many calls could be digital, yet some services remain offline and customers need assistance.
Recommendation
While the use of digital services has increased, HMRC still estimates that 66% of telephone calls could have been handled online. HMRC said this partly reflects customer awareness of the extent of its digital services. It started a campaign in …
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Government Response Summary
HMRC is considering resourcing as part of the Spending Review, further digitizing customer services, and will publish a Transformation Roadmap in 2025 outlining plans to extend digital services and provide better customer service, including measures for digital inclusion and support.
HM Treasury
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15
Acknowledged
HMRC lags in secure digital file sharing; plans secure messaging via app and tax accounts.
Recommendation
HMRC said it uses email sparingly due to security concerns.42 Several organisations representing taxpayers and their agents wrote to us to highlight the need for a secure digital way to share files and correspondence with HMRC so that communication by …
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Government Response Summary
HMRC is considering options to enhance and improve its current services to give taxpayers and intermediaries secure digital channels for communication and document exchange.
HM Treasury
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17
Deferred
High levels of new tax debt continue, prompting HMRC to secure funding for more staff.
Recommendation
HMRC said it is still seeing very high levels of new debt coming into the system, largely as a result of cash-flow issues in small businesses.49 In the Autumn Budget 2024 it received funding for a further 1,800 debt management …
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Government Response Summary
HMRC will respond in September 2025 with its expectations for the tax debt balance by 2029-30 and plans for older debts, allowing for the outcome of the Spending Review Phase 2 to be taken into consideration. They also mention increased staffing and efforts to reduce new debt.
HM Treasury
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18
Deferred
Older HMRC debts are less likely to be repaid, requiring tailored interventions.
Recommendation
As HMRC’s debts get older, they are less likely to be repaid.52 HMRC stressed the importance of tackling the new debt before it ages.53 We asked whether HMRC has a new approach planned for tackling older debts.54 It said it …
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Government Response Summary
HMRC will respond in September 2025 with its expectations for the tax debt balance by 2029-30 and plans for older debts, allowing for the outcome of the Spending Review Phase 2 to be taken into consideration. They also mention increased staffing and efforts to reduce new debt.
HM Treasury
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20
Accepted
HMRC unable to quantify the direct impact of additional revenues on the total tax gap.
Recommendation
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 …
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Government Response 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.
HM Treasury
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21
Acknowledged
HMRC's tax gap estimations, particularly for offshore and foreign income, remain uncertain.
Recommendation
HMRC said that its calculation of the tax gap uses estimation and judgement, and that some parts of it are more certain than others.62 It said in October 2024 it published experimental statistics on the proportion of the tax gap …
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Government Response Summary
HMRC will assess the feasibility of extending the published estimate of the tax gap arising from undisclosed foreign income, including engaging with academics and scaling up compliance activity.
HM Treasury
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22
Accepted
Significant decline in criminal tax prosecutions risks reducing the deterrent effect on non-compliance.
Recommendation
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 …
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Government Response 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.
HM Treasury
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Conclusions (12)
3
Conclusion
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 …
Government Response 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.
4
Conclusion
Acknowledged
HMRC does not provide an efficient means for taxpayers to communicate digitally with HMRC. In 2022–23, HMRC received 22 million items of correspondence, including physical post and forms and interactive forms. Approximately 70% of this comes in through the post. Postal correspondence, as well as some electronic correspondence, requires scanning, …
Government Response Summary
The government agrees with the recommendation to prioritise secure digital communication channels as part of its digital roadmap, affirming this will improve customer service and increase yield.
6
Conclusion
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 …
Government Response 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.
1
Conclusion
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 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.
8
Conclusion
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 …
Government Response 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 better customer service, including digital inclusion and support.
9
Conclusion
Rejected
HMRC says it has not had enough resources to deal with all the contact it has been receiving.17 It estimates that in the last two years, the number of taxpayers in the income tax system has increased by 3 million as a result of the freezing of income tax thresholds. …
Government Response Summary
The government disagrees with the conclusion that HMRC has been too willing to let its telephone services fail and states that improving customer services is one of the Exchequer Secretary to the Treasury's priorities. It says it will publish a Transformation Roadmap in 2025.
10
Conclusion
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 …
Government Response 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 better customer service, including digital inclusion and support.
11
Conclusion
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 …
Government Response 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 better customer service, including digital inclusion and support.
13
Conclusion
Rejected
HMRC closed or reduced the queries it handles on four helplines in 2023–24. For the largest change, the trial closure of the Self Assessment helpline in summer 2023, it gave customers only two working days’ notice.31 HMRC said it was not entirely clear what customers would have gained from having …
Government Response Summary
The government disagrees with the conclusion that HMRC has been too willing to let its telephone services fail and states that improving customer services is one of the Exchequer Secretary to the Treasury's priorities. It says it will publish a Transformation Roadmap in 2025.
14
Conclusion
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 …
16
Conclusion
Deferred
The amount of tax debt owed by taxpayers to HMRC fell only marginally in 2023–24, from £43.9 billion at 31 March 2023 to £43.0 billion at 31 March 2024 (5.1% of annual tax revenues). This compares with a debt balance of typically £15 billion in the five years before the …
Government Response Summary
HMRC received more funding for debt collection and will have more staff in 2025-26. HMRC will respond in September 2025 with its expectations for the tax debt balance by 2029-30 and plans for older debts, following the Spending Review Phase 2.
19
Conclusion
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 …
Government Response 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.