HMRC reports record revenue but customer service issues continue

In part, this increase comes from additional income tax collected from 2.1million extra people affected by frozen 2023/24 income tax thresholds. There were also increases in Corporation Tax collections following the introduction of sliding effective rates in April 2023. 

 

Research and development (R&D) tax relief continues to cause problems and errors are increasing. These schemes are complex and some have taken advantage to make fraudulent claims. An estimated £475million is related to errors and fraud across the small or medium-sized enterprise (SME) scheme alone. Overall, it accounts for over £1billion. HMRC now collects more information and is taking a tougher position on R&D claims. It says regulations and procedures for personal tax credits and child benefits will also tighten up. 

 

Tax debt has fallen from £45.9billion to £44.6billion, which is 5% of total 2023/24 revenues. New debt has fallen by 11%, so more taxpayers are paying on time. However, tax debt is still higher than before the pandemic. Increased insolvencies also mean HMRC has written off £5billion of tax debts. 

 

In the Spring Budget extra funding was provided to reduce the tax debt over the next five years. Increased staffing and use of debt collection agencies are amongst the planned measures. 

 

Responsive customer service remains one of HMRC’s biggest challenges. Taxpayers, agents and small businesses all struggle to contact HMRC, especially via the helplines. HMRC says it wants to help more individuals and businesses get their taxes right first time. The plan is to reduce errors and help more customers with online self-service. 

 

There are seven key customer service measures: 

 

HMRC missed all its performance objectives and five of these measures have declined over the last year. 

 

Out of 36.7million calls from customers, only two thirds managed to speak to an adviser. That’s a drop of 5% on the previous year. In the last five years call waiting times have increased by 18 minutes. In 2018/19 callers waited for just over 5 minutes but last year the wait was over 23 minutes. 

 

The slightly better news is that use of online self-service and customer satisfaction with digital services increased last year. However over 15% of users still remain neutral or unhappy with this service too, so there’s room to improve. So far we don’t know how HMRC plans to use the £51million it has received to improve helplines and overall customer service. 

 

In the meantime, we’ll all have to continue with the challenges of resolving more complex tax enquiries.