HMRC: MPs voice fears over digital shift against backdrop of staff cuts

Agency “has no contingency plan” for lower-than-predicted uptake of digital tax plans, Public Accounts Committee warns

By Jim Dunton

02 Dec 2016

Members of parliament’s influential Public Accounts Committee have raised concerns about the extent to which HM Revenue & Customs is relying on new digital services to reduce demand at its call centres – without a backup plan.

The committee said that the tax collection agency was “staking a great deal” on the success of its plans to further digitise the tax system, but had not agreed contingency plans with the Treasury for the resources it would need if call centre demand did not reduce in line with its expectations.

MPs said the HMRC drive came at a time when the agency faced “an enormous challenge to maintain services”, including delivering £98m in spending cuts; replacing the Aspire IT contract; relocating staff to 13 new regional centres; and dealing with Brexit.

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They noted that HMRC had lost chief digital and information officer Mark Dearnley as a “result of market pressures” and added that the departure of further key staff would “damage HMRC’s capacity to deliver transformation and manage the risks”.

The PAC’s annual report on HMRC, published today, raised the spectre of the agency’s 2014-15 decision to reduce its headcount by 5,600, only to recruit 2,400 additional staff the following year after customer service for personal taxpayers collapsed.

HMRC’s current Spending Review-mandated plans involve reducing its customer service workforce by around one-third. Under the agency's digital ambitions, more roles are set to be automated, allowing a higher proportion of staff to undertake tax avoidance or evasion work. 

Committee members called on HMRC to demonstrate that it had a credible plan to make savings without damaging customer service by March, and prove that it had agreed a contingency plan with HM Treasury should its projections prove to be inaccurate in practice.

Committee chair Meg Hillier said that the public and parliament had high expectations of HMRC and the “vital role” it played in national life, but added that MPs were unconvinced of HMRC's ability to deliver its digital shift.

“The lack of a convincing fall-back plan to safeguard service as HMRC undergoes significant change remains a looming threat to its ability to collect tax from individuals simply trying to pay their fair share,” she said.

“HMRC’s senior management cannot afford to be complacent about the catastrophic collapse in customer service in 2014-15 and the first half of 2015-16, nor about what is at stake should their projections about demand for call centres prove wrong.

“Contingency planning should not be an optional extra. By the spring we will expect to see evidence that HMRC has agreed measures with the Treasury to ensure it is not left playing ‘catch-up’ at taxpayers’ expense.”

Public and Commercial Services union general secretary Mark Serwotka said the report underscored HMRC’s poor track record at service transformation.

“The committee again makes it clear that cutting too many staff in HMRC damaged the service provided to taxpayers, yet the department is absurdly pressing ahead with plans to close 90% of its UK offices and axe thousands more employees,” he said.

“There is now an overwhelming case for these plans to be halted to allow for a proper public debate and parliamentary scrutiny of the kind of revenue collection service we need and the staff and resources it will take."

A spokesperson for HMRC said the department had "invested heavily in customer services, recruiting more than 3,000 new staff who are also available outside normal office hours".

Elsewhere, the PAC report noted the “unnecessary hardship and suffering” caused by HMRC’s failed tax credit checks contract with Concentrix, and promised further analysis in the New Year, following this week’s damning Work and Pensions Select Committee report.

In the wake of the public outcry over the level of Google’s corporation tax payments earlier this year, the committee also reiterated its call for greater transparency in the tax affairs of large multinationals “to increase the pressure on them to pay their fair share of tax”.

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