HMRC has come under fire over its failure to deliver its transformation programme as planned, disparities in the treatment of high net worth individuals (HNWI) compared to other taxpayers, and a lack of clarity in its customer service statistics in the latest report from the public accounts committee (PAC)
In its review of HMRC’s performance 2016-17, the committee found that HMRC’s transformation programme is not deliverable as planned due to unrealistic assumptions, particularly around reduced customer demand, and increased pressure from the 15% of additional workload caused by Brexit. The current estimate is the department will deliver £707m by 2020 against a target of £717m.
PAC also flagged up concerns about whether HMRC will obtain value for money from long-term leases, without break clauses, for its new estate of 13 large regional centres. HMRC has already signed seven 25-year leases and one 20-year lease, on these terms.
PAC says HMRC may face massive changes over the next quarter of a century, such as from a revolution in business technology, and its long-term property deals may restrict its ability to transform or relocate in the future, to support new responsibilities and new ways of working.
On the subject of customer service, while 2016−17 saw HMRC’s best performance in the past five years against its key targets, PAC says future improvements are dependent on reducing levels of customer demand as new digital services are introduced.
The committee points out that HMRC’s original assumptions on the extent to which customer demand could be reduced were too aggressive, and HMRC’s call centre advisers had to deal with eight million more calls in 2016−17 than forecast.
The report said: ‘HMRC says it will support vulnerable and digitally excluded customers by continuing to provide phone services seven days a week and face-to-face “surgeries” in 300 locations.
‘However, we remain sceptical that this will be enough to help more vulnerable people, and are concerned about the disparity of service between how HMRC deals with high-net-worth customers compared with the ordinary customer. HMRC could not give a guarantee that it would wait for demand to fall before cutting its headcount, and warned of a potential risk to customer service performance in future years.’
The committee flagged up concerns about the measures HMRC uses to assess customer service.
HMRC improved its average speed to answer calls from approximately 12 minutes in 2015−16 to under four minutes in 2016–17. HMRC’s target is for its customers to spend no more than five minutes waiting to speak to an adviser. However, this measure excludes the time customers are in HMRC’s automated telephony system before entering the queue.
HMRC admits that typically customers spend an additional two to four minutes listening to automated messages before entering a queue for an adviser, so the total time spent waiting could often be more like nine minutes.
The report also noted: ‘Some of HMRC’s other performance measures also provide a misleading picture of the reality of customers’ experiences. For example, HMRC counts most calls terminated in its automated telephony system as successfully handled. In many cases, though, the customer simply hangs up because they are having difficulty navigating through the automated message system and are frustrated by how long this is taking.’
Meg Hillier, PAC chair, said: ‘HMRC's transformation programme would have been less risky had it not attempted to do everything at the same time.
‘What was already a precarious high-wire act is now being battered by the winds of Brexit, with potentially catastrophic consequences.
‘HMRC accepts something has to give and it now faces difficult decisions on how best to use its limited resources—decisions that must give full consideration to the needs of all taxpayers.
‘In particular we are concerned about the effect on people simply trying to pay their fair share. HMRC’s customer service has improved on the appalling levels of recent years but its claims about call-answering times don’t stack up. Any new deterioration would be wholly unacceptable.’
Frank Haskew, head of ICAEW tax faculty, said: 'HMRC is being put into a very difficult position. It looks clear from the CEO’s comments to the Committee that the timetable for the transformation programme is too ambitious even without the extra demands now faced. It is essential that service standards are not compromised so there needs to be realistic assessment of whether HMRC can deliver on all the demands now being placed on it and, if not, what work need to be deferred or dropped.'
Report by Pat Sweet