We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA

A round-up of current issues surrounding HMRC

Service levels

Following the Chancellor’s Spring Budget on 6 March, we surveyed ACCA members for their insights on the Budget and proposed actions.

The results show that the majority of accountants believe that core issues failed to be addressed in the Budget, and that there was a disconnect between the Chancellor and the reality of small businesses and the UK economy in 2024.

ACCA has repeatedly called on the Chancellor to invest in HMRC – read ACCA’s most recent letter to the Chancellor. The service struggles to keep up with demand, resulting in major hold-ups for simple requests such as VAT numbers.

‘ACCA outlined its concerns regarding the state of HMRC services in our letters to the Chancellor for both the Spring Budget in March 2024 and the Autumn Statement in November 2023. Our members have repeatedly raised that dealing with HMRC is the number one issue they face in their daily work,’ says Glenn Collins, head of strategic and technical engagement at ACCA UK.

Two-thirds (66%) of ACCA members said that poor HMRC services were having a negative impact on their clients, with small businesses bearing the brunt of this issue. Productivity and efficiency were highlighted as the two main areas suffering as a result of poor HMRC services.

Our calls to improve HMRC service levels were widely covered in the UK media, including the following:

HMRC customer service – Inquiry by the Public Accounts Committee

In February 2024, the Public Accounts Committee reported that HMRC’s overall customer service levels had reached an all-time low. The committee was disappointed that service levels were in a state of continued decline, with 62.7% of callers waiting more than 10 minutes to speak to an adviser for 2023/24. While the committee acknowledged that HMRC was making progress in tackling the extent of money owed in unpaid taxes, the report found the tax authority was still struggling to keep pace with its workload.

The National Audit Office found in 2024 that HMRC’s customer service performance on the phone had continued to deteriorate, with average waiting times now exceeding 22 minutes. It also found that HMRC’s plans to reduce its frontline customer service workforce in 2024/25 were highly ambitious and depend on bringing digital improvements in on time.

The committee’s report on HMRC’s Making Tax Digital programme in 2023 warned that it was increasing the burdens imposed on some taxpayers.

Based on the NAO report, the committee will hear from senior HMRC officials on topics including:

  • improving customer service performance
  • optimising digital services
  • plans for customer service workforce reduction.

If you have evidence on these issues, please submit it by 11.59pm on 28 May.

Please look at the requirements for written evidence submissions and note that the Committee cannot accept material as evidence that is published elsewhere.

Please note the Committee is unable to help with individual issues with customer service.

ACCA will also be responding to the call for evidence – if you have any issues that you would like to highlight please email ukpolicy@accaglobal.com.

In addition, the Funding the Nation Campaign report has been issued by the Association of Revenue and Customs (ARC). ARC is an independent trade union and is the HMRC section of the FDA, the trade union for managers and professionals in public service. The report argues that improving tax administration can be a useful tool for the next government. ACCA colleagues contributed to the report, which echoes calls ACCA has made and alongside other bodies; we have highlighted our support and the report includes quotes taken from our recent letters to the Chancellor.

Labour Party plan

The Labour Party recently announced its plan to close the tax gap. The plan would:

  • boost compliance activities in HMRC, recovering more tax revenues from those seeking to avoid it
  • invest in technology transformation in the tax system to improve the customer experience and reduce the tax gap
  • make legal changes to support this effort, restoring a genuine deterrent to tax evasion and making sure people pay their taxes in the first place.

These changes would raise £5bn a year by the end of the Parliament.

As well as this package, Labour will be undertaking further detailed work to turn the tax system around through modernisation of HMRC.

Tax agents

ACCA also recently welcomed the step by HMRC to look to only work with tax agents who are members of recognised professional bodies. Although ACCA is clear that the proposal would need to be carefully implemented to ensure that taxpayers, agents and Exchequer benefit and we do not see a spiral of increased cost and non-proportionate regulation.

Find out more.