MPs have warned HMRC that further cost-cutting could lead to another service ‘collapse’ like the one experienced in 2015.
MPs have criticised HMRC over its customer service record and warned that cutting costs could see standards fall even further.
In a scathing report, the Public Accounts Committee (PAC) said that the level of customer was so poor that, at one point in October, the average time taken for a phone call to be answered peaked at 34 minutes for tax-related queries and 47 minutes for self-assessment calls.
The PAC linked the fall in quality to the deep cuts HMRC made around this time.
The report stated: "The decline in HMRC’s customer services occurred at the same time as it reduced its headcount in personal tax services."
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Cuts and service
[SPOTLIGHT] Earlier this year, a similar report from the National Audit Office (NAO) revealed job cuts at HMRC left many callers waiting for over an hour to speak to an advisor over an 18-month period between 2014/2015 and 2015/2016.
This wasted £97 million of caller money on the combined cost of time spent waiting for calls to be answered and someone dealing with their query.
HMRC cut spending by £257 million between 2010 and 2015 exceeding its target of £193 million by a third. The cuts meant a whopping 10,800 staff were dropped in this time with over half made in 2015.
The poor timing caused a ‘huge spike’ in customer waiting times, which HMRC tried to put down to ‘teething problems’ with its new systems.
But the reality was HMRC had underestimated how much people needed to speak to an advisor, with new online services not having the desired effect of lowering call volumes.
The committee said HMRC had "released too many staff too soon because it was over-optimistic about how quickly the demand on its call centres would fall".
Call waiting times improved by the end of 2015 when HMRC recruited 2,4000 new advisors, however the PAC warned that further cuts planned by HMRC could risk a repeat ‘collapse’ in service.
It said: "HMRC’s plans to cut the cost of its personal tax services by another 34% in the next five years raise the risk of another collapse in service levels. HMRC needs a clear understanding of customer behaviour to estimate how demand will change and must be confident that it can maintain service levels at an acceptable level before it releases further staff."
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Impact on revenue collection
The collapse in HMRC’s service last year is thought to have caused three million to pay the wrong tax.
The PAC has recommended it investigates the relationship between customer service and tax revenue collection.
It’s thought a taxpayer’s attitude to complying is impacted by the quality of interaction they have with HMRC.
Existing data suggests that a 1% improvement in customer satisfaction could increase annual income tax revenue by £43 million.
These figures don’t satisfy the PAC so it wants HMRC to make better progress in understanding and measuring the relationship and to report back by the end of the year.
How to get through to HMRC quicker
HMRC has said it has made a big improvement in its call handling process.
In May it claimed that callers had to wait just six minutes on average to speak to an adviser in the last six months.
But in a poll of loveMONEY readers nearly two thirds said that it took over 30 minutes to get through in this time.
To cut the time you spend on the phone trying to get through to a HMRC advisor, take a look at Pleasepress1, a site that lists call centre shortcuts.
And for more tips on cutting your waiting time take a look at: How to beat the call centre queues.
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