A surprise after HMRC’s decision to temporarily close its self-assessment helplines, it has announced 30% reduction in phone line access to be achieved by 2025 within the next two years. This move comes in response to the increasing demand for services and budget cuts that have affected staffing levels.
Why was this Decision Made?
HMRC's Chief Executive, Jim Harra, stated that the aim is to decrease the volume of phone and postal contact by 30% by 2025, compared to the period between 2021 and 2022. This approach is intended to enable customers to resolve their issues quickly and easily through online channels. The shift will also allow HMRC to provide specialised support to those who require extra assistance.
The reduction of calls by 30% would result in a decrease of nearly 10 million calls per year from the current total of 38.3 million recorded for the year ending April 2022. However, HMRC fell short of its performance targets, with only 71% of calls answered and dealt with by advisers, significantly below the department's target of 85%.
Budget cuts have placed immense pressure on HMRC's service delivery, forcing the organisation to take drastic measures to improve performance and encourage more taxpayers to utilise online web services. Additionally, an increase in the number of individuals falling into higher tax brackets has led to a surge in demand for experienced advisors to handle complex inquiries.
Harra acknowledged the challenges faced by HMRC, including an expanding customer base with increasingly complex needs. The number of higher rate taxpayers, requiring active management within the system, rose by 17% between financial years 2015 to 2016 and 2022 to 2023, with further growth expected. Small businesses also contribute to the mounting pressure, as more of them are struggling with tax debt, accompanied by a rise in the average value of customers' debts.
Why Push for Online Services?
HMRC aims to address the 4.8% tax gap, equivalent to over £36 billion in lost taxes annually. To achieve greater efficiency in serving customers and managing their compliance, the organisation is pushing for faster and more accessible online services.
The annual report highlighted the increasing burden faced by individual taxpayers and companies struggling to meet tax payment deadlines. Over 912,000 taxpayers resorted to time to pay arrangements, allowing them to spread their tax bills over longer periods. This resulted in £5.7 billion of debt being deferred through such arrangements, up from £5.4 billion in the previous year. However, it should be noted that 90% of those enrolled in time to pay settle their bills in full.
HMRC recognizes that investing in a more secure and resilient IT infrastructure is crucial for supporting its online services. Efforts have been made to modernise IT systems, breaking up large contracts into smaller, service-focused ones. Additionally, 62% of migrations from legacy data centres to cloud-hosting have already been completed.
In conclusion, HMRC's plan to reduce phone-based tax advisors by 30% within two years reflects the organisation's commitment to adapting to increasing demand and limited resources. By encouraging taxpayers to utilise online services, HMRC aims to provide efficient support to those who require specialised assistance, while improving the overall customer experience.
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