91探花

Commenting on HMRC’s for 2022/23, Chris Etherington, tax partner at 91探花, said:

‘HMRC’s latest accounts confirm the worrying reality that taxpayers have faced declining customer service support in the last year. It’s clear that HMRC is feeling the strain of the weight of demands placed on it by the government’s tax policies. It is having to deal with an increased number of queries from those dragged into the tax system through fiscal drag. Precious resource has also been preoccupied by high volumes of claims made by repayment agents, which could improve over time following reforms made in that area. 

‘The level of complaints to HMRC is 39% higher than pre-pandemic. For many other organisations, business has returned to normality following the challenges posed by the pandemic but in HMRC’s case, the number of complaints has increased significantly. In the year to 31 March 2020, the total number of complaints to HMRC was 70,056, which increased to 97,088 in the year to 31 March 2023.

‘Urgent action will be required to get HMRC’s performance back on track, that means improving internal efficiencies but also ensuring there is appropriate funding to bring HMRC’s technology up to scratch and that it is appropriately resourced. A healthy tax system requires HMRC to be in fit and fighting shape and a lack of funding could be a false economy for the government.’

Susan Ball, employment tax partner at 91探花, added: ‘HMRC states it wants to reduce the volume of contact via the phone and post by 30% by 2025 compared with 2021 to 2022. But it appears that urgent investment is needed in these areas while HMRC gets its online services to an acceptable standard that meets taxpayers’ needs. If it doesn’t do this, it will become more difficult for taxpayers to comply with their responsibilities, and the £35.8bn tax gap (4.8% of tax liabilities) could start to widen back to where it was in 2005/6 at 7.5%. Perhaps HMRC should consider whether aspects of its current business model and targets are engendering the right results? Does the current approach enable it to deliver its programme of digital services, while at the same time clearing the backlog, and managing business as usual? Does it need to move more people into customer services, where numbers have reduced in recent years from 25,500 to 19,500 people?

‘Several long-term systemic problems need to be addressed, including poorly designed IT systems and gaps in online services. Taxpayers might be surprised to know that because some of those systems don’t talk to each other, manual interventions are needed, which can often lead to errors. Historically, government has underinvested in HMRC and its systems which is now causing serious problems. HMRC runs one of the largest and most complex IT estates in the UK, so updating its technology will always be a continuous process.  

‘Whilst there is a clear commitment in the accounts and from government to invest in the infrastructure, the survey of agents and taxpayers in February 2023 shows there was a sense that HMRC builds processes and systems from its own perspective rather than that of taxpayers and agents. This needs to be addressed to ensure it’s easy for taxpayers to pay the right amount of tax at the right time. The services need to manage both taxpayers with straight forward matters and well as those with complex ones.’