As regular readers of the Blog will be well aware, HMRC’s customer service has been subject to increasing levels of complaints in recent years. Most are from bewildered and exasperated taxpayers, with frustrated accountants not far behind.
But now one of the UK’s biggest accountants, UHY Hacker Young (UHY), have been looking at the issue in some depth and have uncovered new data that show the level of complaints is rapidly increasing. They found that the number of taxpayers complaining about HMRC delays surged from around 20,000 in the 2021/22 tax year to 35,000, the following year, with HMRC having to fork out nearly £1m in compensation to almost 5,000 disgruntled taxpayers who had complained about delays.
The complaints come after a year where taxpayers and accountants have faced further delays as a result of the drastic reductions to helplines. Earlier this year, HMRC restricted the accountants dedicated line during our busiest time of the year; namely December and January during the busy tax return season, when only queries relating to payments or repayments were responded to.
U-turns and sticking plasters
HMRC had planned to continue steadily reducing its services, but In March this year they performed an abrupt U-turn when pretty much anyone with ‘a dog in the fight’ from MPs to individual taxpayers, complained. HMRC’s chief ‘Big Jim’ Harra blamed ‘diminishing’ resources when pressed by the Treasury Committee over his original plans to make permanent changes to the level of service on its helplines.
Soon after, HMRC received a ringfenced £51m to improve the failing helplines, but most people in the know, quickly realised that whilst the extra money is a good start, the problems with HMRC resources require a lot more a £51m sticking plaster, to plug the gap.
Compensation
The data from UHY revealed that the increase in complaints has led to HMRC having to pay compensation to thousands of customers, including covering the costs incurred from waiting on the phone. In one common example raised by UHY, HMRC has had to pay out to taxpayers who have paid significant levels of excess tax as a result of missing deadlines due to delayed responses from the tax authorities.
The impact of the delays can be clearly seen in the compensation paid out to complaining taxpayers. The nearly £1m paid out has nearly tripled from the 2021/22 level of £371,000 and the number of customers complaining who received compensation, nearly doubled over the same period.
Obstacles in the path
UHY also commented that the actual numbers of complainants were actually much higher, but because the process you have to go through to get meaningful compensation from HMRC is very admin-intensive, most give up part way through the process.
The tax office has rules on what evidence taxpayers have to provide, to prove that they’ve suffered additional costs and that they were directly caused by delays. These rules have been described by campaigning tax lawyer Dan Neidle as unnecessarily complicated, bureaucratic in the extrema and appear to be designed to actively discourage taxpayers from pursuing a claim.
HMRC self-imposed rules are clearly designed to be a high bar to overcome and not surprisingly, because of the multiple layers of bureaucracy and unrealistic demands from HMRC for taxpayers to prove ‘absolutely’ their losses, most give up part way through and abandon their claim.
A final comment from UHY Hacker Young
Graham Boar, Partner at UHY, said: “HMRC’s customer service crisis is the worst it’s ever been. The poor quality of service is incredibly damaging for individuals and small businesses. It takes a very long time to get through to anyone – and if you’re lucky enough to reach someone they’re rarely the relevant expert. HMRC is severely under-resourced and needs more funding to deliver the service customers deserve.”
“Complaints are mounting and the new government needs to properly invest in HMRC and its customer service functions and not just in its tax investigation side.”
Accountant’s view
I don’t need to add a great deal of further comment as I pretty much 100% agree with the comments made by Graham Boar. All accountants, as well as the majority of taxpayers who have to interact with our tax department, have noticed the gradual deterioration of service levels in recent years.
HMRC have clearly developed a siege mentality, which even combined efforts of the parliamentary oversight committees, the Public Accounts Committee and the Treasury Select Committee, have failed to penetrate. We can only hope that the next Chancellor, which I suspect will be Rachel Reeves undertakes a root and branch reform. (And yes, I still believe in Father Christmas!)
