HMRC service levels: Back to the Future or Déjà vu?

15 August 2023

It’s feeling a lot like déjà vu at present when you come to talk about HMRC service levels. Yes, we have been here before. Back in 2015 we were having broadly the same conversation. HMRC was showing serious cracks, under fire over its failure to answer the phone and deal with post on time, after 10 years of shedding two fifths of its workforce. Braced for further problems after spending cuts and with a large-scale reorganisation on the horizon. 

HMRC said at the time it believes it could tackle the root cause of the problems by investing heavily in digital technology. While the letters piled up, leading to a surge in phone calls as taxpayers rang to find out why they had not received a reply. Sound familiar? At the time, as many as one in three calls were left unanswered, sometimes after taxpayers had been waiting on the line for two hours or more.

Ms Homer, Jim Harra’s predecessor said at the time. ‘It is disappointing to be required to make cuts at a time when we are delivering a transformation programme to modernise HMRC, improve services to customers and increase our compliance yield.’ HMRC insisted at the time that its core strategy remained on track and it was ‘completely committed’ to delivering the new digital accounts that are at the heart of its plans to modernise tax collection. In 2016, when HMRC announced Making Tax Digital, it was then able to recruit 3,000 more staff to help deal with the problem. 

But was it enough? A National Audit Office (NAO) report flagged that HMRC was going to lose many experienced staff to retirements. HMRC also embarked on a programme of replacing 170 offices across the UK with 13 large regional centres promising that the change would provide an even better service for customers and deliver significant savings – annually some £83m from 2025/26. 

In 2017, the NAO said that the tax authority had already recognised that its original plans were unrealistic, and HMRC was considering changing them. But the office changes undoubtedly led to staff leaving (they now have 12 operational centres with 2 more due to open in Newcastle and Portsmouth), the travel some had to new offices being just too far. More recently in 2021, HMRC agreed its new pay deal with staff and Jim Harra stated they would be moving staff onto one standard contract and customer service staff hours would change.

So is part of the problem that HMRC is just being asked to deliver too much at once by government? Large organisations can’t change overnight. All in all, most organisations would realise that too much upheaval was bound to impact moral and service delivery. Successful transformations are about reinventing an employee or customer experience, but people don’t care about a “transformation project,” they care about what it will achieve and how it will impact them.

Fast forward to today and it appears we have similar issues as those in 2015 or do we? HMRC staff numbers in customer services were cut by 6,000 from 2019. HMRC accounts detailed that in 2021-22 they recruited circa 4,000 new compliance officers but noted that it takes around 18 months to train new compliance officers and around four years for them to reach full productivity due to the training and experience required. Last month’s staffing information shows that HMRC in the last four years has increased its Senior Executive Officer and Higher Executive Officer grade numbers by around 6,000 workers. These are the more experienced officers and likely to be those that deal with technical issues when they arise as well as manage other staff. 

So perhaps HMRC is starting to turn a corner at least regarding staffing and the workforce is becoming more settled. Let’s hope the lessons on how to improve service levels were learnt in 2015 or perhaps we need Marty McFly to travel back and change it!