HM Revenue and Customs has outlined improvements to its performance in handling complaints following a warning from the Adjudicator’s Office and its own "deep dive" prompted by a spike in complaints last year.
The Adjudicator’s Office annual report, published in September, flagged a “significant” increase in complaints about the department last year.
In its response, published today, HMRC said it has acted on the watchdog’s recommendations to improve its processes and said a "deep dive" it had conducted into its complaints processes and handling in 2023-24 had led to an overall improvement in its performance in 2024-25.
The Adjudicator’s Office – which investigates complaints about HMRC, the Valuation Office Agency and Windrush compensation issued by the Home Office – resolved 1,046 complaints about the tax agency in 2023-24, up from 950 the year before.
In its annual report in September, adjudicator Mike McMahon said this increase – along with a rise in complaints about the Home Office – had driven a “significant increase” in his office’s workload.
“It has been another challenging year for HMRC. They have struggled to deal with high volumes of complaints. Issues with customers accessing help – primarily through their phone lines – are significant and have been reported in the media,” he wrote.
In its response, the tax agency said steps it has taken "to drive forward improvements to customer experience" following the deep dive include running a series of insight events on customer impacts for complaints handlers to build capability and improve customer experience; improving training to enable complaint handlers to resolve issues at the first point of contact; and developing a digital complaint route for agents.
HMRC's customer service has come under close scrutiny over the last two years, with a National Audit Office report finding it had “continued to decline” in 2023-24 after hitting an "all-time low" in 2022-23.
Last month, HMRC permanent secretary Jim Harra was forced to deny an accusation from the Public Accounts Committee that the department had provided a “deliberately poor” level of customer service on its telephone lines. PAC had said HMRC had been “too willing to let its telephone services fail in the hope this forces people to use its digital services instead”.
The Adjudicator’s Office, which independently assesses complaints that have not been successfully resolved through HMRC's complaints procedure, investigated and resolved 843 HMRC complaints in 2023-24 – a third more than in 2022-23. It fully or partially upheld 41% of those complaints, down from 47% the year before.
The increase in complaints prompted the Adjudicator’s Office to publish a so-called Level 3 insight report alongside its annual report to highlight lessons from the complaints it investigates and help HMRC improve services for its customers.
In particular, the insight report said HMRC should take steps to ensure it is meeting a commitment set out in its charter to be “mindful” of customers’ wider personal situation and provide extra support where needed.
The report highlighted a number of case studies in which customers made HMRC aware of their individual circumstances either before or during the complaints process, but these were not taken into account until the complaint had been escalated to the Adjudicator’s Office.
“Customers cannot know and understand every facet of HMRC’s operations and where their individual circumstances may warrant a different approach. Many will also not understand the scope of HMRC’s discretionary powers. In short, for many of HMRC’s customers, there is an imbalance in power,” the report said.
“Because of this, the responsibility to take account of individual circumstances lies with HMRC, in line with their charter commitments.”
Among other things, the Adjudicator’s Office said HMRC “should ensure that they are clear to all those involved in the complaint process that discretion is a key tool in HMRC’s approach to resolving complaints”.
In the five months since the report was published, HMRC said it had launched a “quality strategy” to identify where more training is needed to help staff make decisions based on customers’ circumstances; and used internal platforms and newsletters to boost awareness of the need to apply these to decision-making.
The tax agency said it has also has also updated its internal guidance “to support complaint handlers to identify customer vulnerabilities and fully consider their circumstances in the resolution of the complaint” in response to the recommendations, as well as reviewing a series of cases “to gain insight on how we can effectively apply customer circumstances to decision-making”.
The Adjudicator’s Office had said that reviewing a sample of complaints could help to improve service and “quantify any cost savings to the department on the assumption that early deployment of discretion would have resolved the complaint quicker”.
Elsewhere in its response, HMRC mentioned its decision to reverse plans to close its self-assessment, VAT and PAYE helplines in March 2024 as evidence of its “readiness to learn from our customers”.
“We stopped our plans in response to feedback and engaged with stakeholders to ensure we met taxpayers’ needs as we continue to encourage more customers to self-serve online,” the response said.
In the annual report, McMahon described HMRC’s decision to close its self-assessment helpline between June and September 2023 as a “significant step”.
He said there had been an “improved picture” in the months since the reporting year ended, nodding to initiatives such as “greater empowerment of frontline staff to fix problems at first contact before they develop into a complaint” and HMRC’s plans to move more of its activity online.
But in the September report, McMahon said it was “too early to say that HMRC have in place a long-term sustainable solution that ensures great customer service and complaint handling”.
“We will continue to hold HMRC to account especially in relation to service that is too slow or doesn’t answer the problem raised and for those who find it difficult to interact digitally with HMRC,” he said.