An investment of £1bn into HM Revenue and Customs could raise more than £11bn, a union report claims.
The Association of Revenue and Customs report is supported by a survey which shows HMRC staff find that aging tech, low staffing levels and existing processes are impacting their ability to work efficiently.
As the report, Funding the Nation: Optimising HMRC, was launched in parliament on Tuesday, HMRC announced it would shut its tax self-assessment phoneline for half of the year and only open it for “priority enquiries” in the other half. However, on Wednesday HMRC U-turned, saying it is halting the plans "while it engages with its stakeholders about how to ensure all taxpayers’ needs – including small businesses – are met as HMRC shifts more people to online self-service in the longer term".
The paper by ARC – the FDA’s section for senior HMRC officials – estimates that, if the government invested £700m into its tax compliance regime, and £210m into customer services, it could raise £11.3bn for the next government over a period of parliament – or over five years.
The survey carried out by ARC as part of its evidence gathering found that poor processes and systems, low staffing levels, and technology problems are chief among HMRC staff’s concerns.
In the poll of 700 HMRC officials, some 81% agreed that “current departmental processes and systems inhibit [their] productivity, 68% said lack of staff had impacted their work, and 55% of respondents said issues with technology inhibited their ability to work effectively.
IT issues are wasting an hour-and-a-half of the average HMRC employee’s week, according to the survey, with 15% saying they lose more than four hours to poor technology per week, around one-tenth of a full-time staff member’s working hours.
The union said that extrapolating this across HMRC’s full workforce of roughly 61,000 full time equivalent staff worked out at around 4 million lost working hours per year.
FDA general secretary Dave Penman commented that it is “completely unacceptable in 2024” that HMRC officials are reporting losing hours of working time every week because of poor technology.
Respondents also said improving poor processes and technology and increasing staffing levels were the best ways to increase HMRC’s tax compliance yield.
Some 62% said “more efficient internal processes” would be an effective way to increase the yield, while 58% agreed having “additional staff” would help. Almost half of respondents (47%) said improving technology would be an effective way to achieve this. Respondents could pick more than one answer.
The concerns among staff are mirrored by deteriorating standards in customer services, with average customer hold times on HMRC phone lines increasing from an average of four minutes 42 seconds in 2014 to the current average of 24 minutes, according to the report. ARC says this, combined with poor postal services, is costing UK businesses around £1bn per annum.
HMRC U-turn
HMRC announced on Tuesday that its tax self-assessment helpline would close between April and September, with customers to be directed online, among other changes. However, it pressed paused on the plans on Wednesday after they came in for criticism.
Harriett Baldwin, chair of parliament's Treasury Committee, said the move to online services should not be "forced on taxpayers" and that HMRC has not yet demonstrated that the department or the public "are ready to make such a monumental change to how they resolve tax issues".
PCS called the plans "astounding". It added: "The government mantra of ‘doing more with less’ remains nothing more than a fantasy; and one that continues to deliver nothing other than catastrophic results."
Announcing the U-turn, HMRC pem sec Jim Harra said: "The pace of this change needs to match the public appetite for managing their tax affairs online. We’ve listened to the feedback and we’re halting the helpline changes as we recognise more needs to be done to ensure all taxpayers’ needs are met, whilst also encouraging them to transition to online services."
Under the now-suspended plans, the self-assessment helpline would have only opened from October to March, and dealt with "priority queries" only. HMRC had also announced that its VAT helpline would open for just five days every month ahead of the deadline for filing VAT returns and its PAYE helpline would no longer take calls from customers relating to refunds. Advisers would continue to be available during normal office opening hours to support customers "who cannot use online services or who have health or personal circumstances that mean they need extra support".
Angela MacDonald, HMRC’s second permanent secretary, said the changes would allow helpline advisers "to focus support where it is most needed – helping those with complex tax queries and those who are vulnerable and need extra support".
Civil servants 'can't keep on delivering more for less'
MacDonald had argued the changes would allow the department to "help more customers and improve our customer service levels without spending additional public money".
But Penman warned – before the plans to reduce phone services was announced – that civil servants cannot keep doing more with less resources.
“The number of taxpayers is increasing and HMRC now manages more complex tax administration, and more frequently, than it has had in previous decades," he said, commenting on the ARC report findings.
"The department’s ability to adapt to this ever increasing workload is a success story but civil servants simply can’t keep on delivering more for less. Civil servants need the tools to do their jobs effectively and efficiently."
Penman said previous strategic investments in HMRC compliance have successfully increased the tax take but these investments have been "ad hoc".
"To more effectively deliver compliance yield, HMRC needs a clear long-term plan," he added. “As we approach the upcoming general election, I call on all political parties to take these recommendations on board and pledge to properly invest in HMRC. I believe this report provides a blueprint for a future government, of any colour, for how to deliver better administration in this country.
“A world class tax administration is in the public interest. Only an HMRC that is properly resourced to face new technological challenges, stay ahead of criminals and support taxpayers will deliver the revenues that can support our economic recovery and be able to give the government choices about investing in growth.”
An HMRC spokesperson said: “We have a complex IT estate and we are constantly working to improve it to support both customers and our colleagues.
“We’ve also invested significantly in rolling out modern digital devices to all our colleagues and the best collaboration tools, ensuring they have the right tools for the job and can be as productive as possible.”