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HMRC customer service deteriorates to “all time low”

Thousands more nudge letters being sent out by HMRC are causing needless worry to UK taxpayers, and are unnecessary.

Public Accounts Committee ask questions of HMRC after call times increase, while tax office’s treatment of taxpayers’ scrutinised

HMRC’s customer service levels have fallen to an “all-time low”, with taxpayers suffering from a tax authority that is“struggling to cope”, a report published by the Public Accounts Committee (PAC) has revealed.

Published today, the report expresses concern over HMRC’s performance, which has continued its five-year decline.

In addition to increased waiting times to speak to an advisor in 2022/23 – as 62.7% of callers waited for more than 10 minutes (up from 46.3% in 2021/22) – HMRC came under fire for directing callers to use digital services instead which“it insists are good quality”. This was described as an “excuse for poor services to customers now”.

The report also noted that while tax collected by HMRC was at a record high in 2022/23 (£814bn), the tax office fell £2bn short of its £36bn compliance target – which is money that would have been otherwise lost was it not for HMRC’s activity. This shows that “HMRC is apparently struggling to cope”.

Questions over how fairly HMRC treats taxpayers were also posed by the PAC. The tax authority came under fire for its approach to the IR35 legislation: “HMRC’s approach to tackling IR35 is deterring legitimate economic activity, and that a lack of confidence in how to apply the rules, together with HMRC’s tough approach when taxpayers make mistakes, is unnecessarily putting companies off using contractors.”

Seb Maley, CEO of IR35 specialist and compliance expert for flexible workers, Qdos, commented: “This is a damning assessment of the nosedive in HMRC customer service levels which ultimately, taxpayers are paying the price for. A noticeable drop coincides with increased pressure on HMRC to collect more tax. It doesn’t stack up and has a major impact on how taxpayers are being treated.

“That the Public Accounts Committee described HMRC’s telephone lines’ holding message as one of the most streamed pieces of music in the country says it all.

“Questions are also rightly being asked about HMRC’s heavy-handed approach to IR35 compliance, which is putting off businesses from engaging genuine freelancers and contractors – at a great cost to these workers, the businesses themselves and the flexibility of the labour market.”

Dame Meg Hillier MP, Chair of the Committee, said: “Almost eight years have passed since our Committee challenged HMRC over its telephone lines’ holding message being one of the most streamed pieces of music in the country. Our latest report into its performance sadly illustrates a continued tale of decline in its services. HMRC has decided to push taxpayers to online support but as both tax complexity and taxpayer population increase this is not good enough.

“Our report also poses serious questions as to whether HMRC is getting the balance right between its civil and criminal prosecutions. Our findings show a steep drop in the latter at the same time as we see HMRC going to great lengths to challenge people in court over their employment status. Our Committee has heard the frustration felt by the many taxpayers and organisations who provided evidence to our inquiry loud and clear. HMRC would be well-advised to do the same.”

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HMRC customer service deteriorates to “all time low”