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HMRC’s customer service is ‘poor value for money’, says NAO

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Vulnerable taxpayers are ‘particularly badly served’ by HMRC, the CIOT’s Low Incomes Tax Reform Group has warned after the National Audit Office found that, despite recent improvements, HMRC’s customer service arrangements ‘still represent poor value for money for customers’.

The NAO pointed out that HMRC answered 91% of calls in October 2012, but warned that HMRC may have overestimated its performance for 2011/12 because ‘all customers who hang up during the automated message are counted as being answered’.

The NAO’s review, published yesterday, said HMRC had difficult decisions to make about prioritising resources, given its spending review commitments to reduce costs and increase tax revenues.

Customer service levels ‘dropped sharply’ in 2010/11 when problems with the new National Insurance and PAYE System (NPS) increased customer queries, the NAO said: ‘HMRC received 122m phone calls in 2010/11 … of which it answered 48%. [HMRC] has now restored service to previous levels and dealt with long-term backlogs by employing 2,500 temporary staff, enhancing phone technology and improving productivity.’

So far in 2012/13 HMRC had improved its handling of post but its performance in handling calls had been varied: ‘However, in October 2012, HMRC answered 91% of calls, its highest monthly performance since December 2009.’

‘A low level of service’

Yesterday’s report added: ‘In 2011/12, HMRC met a lower interim target for the percentage of phone calls answered and targets for phone and post quality, but did not meet targets for answering post … HMRC answered 74% of phone calls compared to a target of 58%. This interim target was set following problems introducing NPS as part of a staged approach to improve performance and answer 90% of calls by 2015.’

But performance in 2011/12 was ‘nevertheless a low level of service’.

‘For example, 20m calls (including calls where customers rang back because they did not get through first time) were not answered. All customers who hang up during the automated message are counted as being answered. For many callers this will be correct because they will have their query answered by the message. This, however, may overestimate the number of answered calls. HMRC has told us that it is aware that some callers will hang up dissatisfied and is looking at how to address this.’

An HMRC spokesman said: ‘In 2010/11 we answered 48% of all call attempts, rising to 74% in 2011/12. By late 2012 we were answering over 90% of calls to our contact centres. We are well aware that in the past we have not delivered the standard of service to which we are committed. We are determined to build on this progress and we have invested £34m so we can deliver on our improvement targets earlier than planned.’

The cost of waiting

The average call waiting time increased from 107 seconds in 2009/10 to 282 seconds in 2011/12. ‘Performance can be substantially worse than average in some months and at peak times. For example, between April and September 2012, nearly 6.5m people (25%) waited longer than 10 minutes,’ the NAO reported.

Callers are charged once they are connected, even if they are held in a queue: ‘We estimate that in 2011/12, it cost customers £33m in call charges while they waited for HMRC to answer the phone and the estimated value of customer time while they waited was £103m,’ the NAO said.

Margaret Hodge, chairman of the Commons public accounts committee, said it was ‘totally unacceptable that HMRC uses costly 0845 numbers’.

HMRC said: ‘We want people to be able to access our phone services at the lowest possible cost to them, while ensuring value for money to the taxpayer. As part of this commitment we have transferred our tax credits phone lines, accounting for around 40% of our calls, from 0845 to 0345 numbers.’

The spokesman added: ‘We receive well over 10m pieces of post every year, and the most recent figures show we are now replying to over 80% within 15 working days.’

Low income customers

LITRG chairman Anthony Thomas said: ‘Poor service levels and unacceptable delays at HMRC call centres have a real impact for taxpayers struggling to navigate our hugely complex tax system. Difficulties getting advice and answers to queries lead to taxpayers making errors which, in many cases, are completely avoidable.

‘HMRC’s performance in answering the telephone and handling post has been under scrutiny for some time. The department has been attempting to make improvements, by liaising with tax agents and voluntary sector groups to identify and address the problems. We have cautiously welcomed a number of such steps in recent months. These include a new helpline service for bereaved customers, a plan to increase the number of staff available to answer calls and reduce waiting times and proposed improvements to modernise the tax system.

‘Nonetheless, we remain very concerned for HMRC’s low-income customers. Long waiting times for calls to be answered can be prohibitively expensive for people using mobile telephones, especially Pay As You Go.’

He added: ‘Vulnerable taxpayers are particularly badly served by HMRC. Increased online services are an effective way of improving value for money.’

Digital exclusion

LITRG had demonstrated earlier this year, in its report Digital Exclusion, that there are many people who cannot take full advantage of online services, Thomas said.

‘The NAO report rightly emphasises that those who lack internet access must not be left behind in the race to achieve cost savings through increased digital services. The NAO are also right to stress more generally that HMRC need to consider very carefully the impact on these taxpayers, when designing new processes, the accessibility and usability of its systems and communications for customers with disabilities.’