'Current systems are deficient': HMRC warned over 'digital-by-default' approach

Industry bodies say there is a "gap" between the availability of online tools and HMRC's perceptions of what taxpayers can actually do
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By Sam Trendall

04 Jun 2024

Three professional bodies representing tax, accounting and finance professionals have warned HM Revenue and Customs about its current levels of customer service and the efficacy of its plans for digital transformation.

The tax agency’s customer service was the subject of an ongoing inquiry by parliament’s Public Accounts Committee – before it was dissolved last week, ahead of the upcoming general election. Shortly prior to its dissolution, the committee published large amounts of recently submitted written evidence.

PublicTechnology.net logoIncluding in these documents was a submission from professional body the Chartered Institute of Taxation – whose membership comprises 20,000 tax advisers.

CIOT told MPs: “We continue to be extremely concerned by HMRC’s poor customer service across many key areas, and the approach they are taking to moving taxpayers to online services. We do not believe there is adequate evidence that measures such as closing telephone helplines will have their desired effect, nor are we convinced that they will not negatively impact compliance.”

The submission added that, while HMRC continues to talk up the potential for a far greater number of interactions to be completed online – greatly reducing pressure on phonelines and other customer-service offerings – the capability of the department’s digital platforms cannot currently keep up with its ambitions.

“We support the use of digital tools to enable taxpayers (and their agents) to comply with their tax affairs,” the institute said. “However, there remains a significant gap between both the actual availability and awareness of such tools, and what appears to be HMRC’s perceptions of what taxpayers (and their agents) can already do. The extent of that gap needs to be determined, and a plan devised to bridge it.”

Similar concerns are shared by another industry body: the Association of Chartered Certified Accountants. In its submission to MPs, ACCA – which said that “dealing with HMRC is the number one issue our members face in their daily work” – warned that HMRC’s online tools are currently ill-equipped to cope with the heavy lifting of customer service. This lack of readiness would be compounded if HMRC seeks to use increased digitisation as a means of helping to reduce headcount, the association warned.

“Current digital services must be improved before proceeding with a ‘digital-by-default’ approach,” it said. “Current systems and IT supports are deficient and severely impacting on service delivery. Some digital processes are unnecessarily complicated and not yet at the standard required to facilitate the shift, with digital and paper options interacting faultily.”

‘Pace of change’

As part of its inquiry, PAC published a report earlier this year that found that HMRC’s customer-service levels have reached an “all-time low”.

That damning assessment came just a few weeks before the department announced plans to significantly scale back its telephone support services – including closing some helplines entirely for six months of every year.  But, the day after these planned closures were announced, HMRC U-turned on the decision, with chief executive Jim Harra stating that “the pace of change needs to match public appetite”.

Since then, ministers have announced a commitment of £51m to be invested in the department’s phonelines, with the ambition of bringing overall service back up to the published target of 85% of calls to advisers being answered

This cash injection comes after “a lack of investment [that] has, over time, profoundly damaged relationships”, according to ACCA.

This sentiment was echoed in evidence submitted by a third trade body, the Association of Accounting Technicians. But the association also warned that money alone will not solve HMRC’s customer-service issues.

“AAT recognises that HMRC is working hard to deliver improvements and solutions, but it is hamstrung by consistent underinvestment,” it said.

“HMRC urgently needs extra investment in its customer services to ensure it meets its charter responsibilities. The trend of contending with significantly increasingly demands with declining resources cannot continue. The government should consider other solutions to reduce the burdens on HMRC. Extra investment is essential but is not the only solution. Digitisation should be progressed without any further delays, co-designed more with software developers, and accompanied with targeted support for those who are digitally excluded.

"A long-term strategy for HMRC, including tax simplification and workforce planning, would also help HMRC ensure it has the workforce necessary to meet required service performance.”

Asked about the submissions, HMRC acknowledged that the performance of its phone lines continues to fall below targets. But added that its app and digital services were used more than 200 million times last year, achieving an 80% satisfaction rate with users and respective ratings of 4.8 and 4.7 on the Apple and Google app stores.

The department also reiterated a previously cited statistic that more than three million phone calls it receives each year relate to one of three process that, according to HMRC, can be easily completed online: resetting an online password; obtaining a tax code; and obtaining a National Insurance number.

Appearing before PAC six weeks ago, HMRC boss Harra suggested to MPs that – having swiftly cancelled the planned helpline closures – the department may now be more circumspect in the rollout of its digitisation plan.

“We will be engaging with stakeholders to understand more about their concerns and to see if we can demonstrate to them that we have addressed those,” he said.

“But, inevitably, in the short term we are going to be implementing this strategy on a slower track and will be more reliant on marketing our services and persuading and informing our customers, to encourage them to try online first.

"We have done extensive research with customers to understand what is involved in doing that, so we will still be able to make progress, but not at the rate that we would need, based on current resources and current forecast demand.”

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