3rd Report - HMRC Customer Service and Accounts

Select Committee

Public Accounts Committee HC 347 22 January 2025

Report Status Government responded

Conclusions & Recommendations 22 items (10 recs)

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Government Response (AI assessment · 22 of 22 classified)

Accepted 12

Acknowledged 4

Deferred 3

Rejected 3

Government response

Treasury minutes: Government response to the Committee of Public Accounts on the Third report from Session 2024-25 · published 6 May 2025

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Recommendations & Conclusions

12 results

3 Conclusion Accepted

Understand digital service replacement capacity and ensure minimum telephone service for all customers.

Conclusion

HMRC has been too willing to let its telephone services fail in the hope this forces people to use its digital services instead. HMRC estimates 66% of calls it receives could be handled online instead. It hopes that by encouraging … Read more

Government Response Summary

The government states it has expanded Extra Support teams and funded community organisations, and will publish a Transformation Roadmap in 2025 outlining plans to extend digital services, ensure digital inclusion, and support customers who cannot interact digitally.

HM Treasury

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5 Recommendation Accepted

Set out debt balance reduction targets and a plan for recovering older uncollectable debts.

Recommendation

HMRC’s investment in debt management has not sufficiently reduced the amount of tax owed to it. In 2023–24, the government announced £303 million additional funding for HMRC to improve its capacity to manage tax debts. This followed £47.2 million announced … Read more

Government Response Summary

The government commits to responding to the Committee by September 2025, outlining its expectations for the tax debt balance by 2029-30 and plans for recovering older debts.

HM Treasury

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6 Conclusion Accepted

Set ambitious targets for tax gap reduction, develop offshore strategy, and research effective deterrents.

Conclusion

We welcome HMRC’s new goal to reduce the tax gap but we are concerned that it still plans to reduce the number of prosecutions. HMRC expects to bring in £6.5 billion additional tax revenue by 2029–30 as a result of … Read more We welcome HMRC’s new goal to reduce the tax gap but we are concerned that it still plans to reduce the number of prosecutions. HMRC expects to bring in £6.5 billion additional tax revenue by 2029–30 as a result of measures set out at the Autumn Budget 2024, and has funding for 5,000 additional compliance officers. However, it could not tell us how much this will reduce the tax gap. HMRC has published experimental statistics on the offshore tax gap, but admits this is not a complete measure. At £0.3 billion we are concerned HMRC’s estimate looks implausibly low and that there is no way of making an accurate estimate. We are also concerned that HMRC is not doing enough to tackle deliberate cases of non-compliance. HMRC can use civil processes to sanction non-compliance, but its use of criminal investigation and prosecution is decreasing, and there were only 344 criminal prosecutions in 2023–24, compared with 691 in 2019–20, with HMRC focusing on the most serious and high-value cases. We are concerned that HMRC is not using the criminal enforcement tools at its disposal. There have never been any prosecutions under the criminal facilitation of tax evasion offence. The number of HMRC investigations into serious tax fraud and avoidance has fallen to a six-year low. HMRC is examining the deterrent effect of criminal investigations and prosecutions to understand their effectiveness in recovering tax. recommendation Now that HMRC has been tasked with reducing rather than just maintaining the tax gap, it must be bolder in identifying and tackling abuse. HMRC should: a. set ambitious targets for compliance yield that would allow it to achieve annual reductions in the tax gap; b. obtain an estimate that is as accurate as feasibly and practically possible of the offshore tax gap and develop a standalone strategy to reduce it; and c. research which interventions are most effective in achieving a deterrent effect for tax evaders and organised criminals. This research should expl Show less

Government Response Summary

The government agrees with the recommendation, stating it will increase counter-fraud capability and publish an updated Issue Brief detailing its ambitions to address fraud and its increased effectiveness through civil and criminal powers, also committing to publish a target for charging decisions in due course.

HM Treasury

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1 Conclusion Accepted

Committee takes evidence from HMRC on 2023-24 performance and customer service.

Conclusion

On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) on its performance in 2023– 24 and its customer service.1

Government Response Summary

The government states it is actively exploring the use of callbacks and will launch procurement for a new Contact Service platform in spring 2025, aiming for it to be in place by 2026-27.

HM Treasury

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7 Recommendation Accepted

HMRC provides limited and delayed information on customer telephone waiting times.

Recommendation

We asked whether HMRC provides customers with information on expected call waiting times. It said it provides this information on many of its helplines, but the information is limited to the average call waiting time from the previous day rather … Read more

Government Response Summary

HMRC will procure a new Contact Service platform in Spring 2025 to be in place in 2026-27, that gives customers an indication of likely wait time and call back options.

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8 Conclusion Accepted

HMRC continues receiving millions of calls despite digital-first ambition and roadmap plans.

Conclusion

HMRC has been working to become a ‘digital-first’ organisation since 2010 and hopes to replace traditional forms of contact with digital services.13 It said its research shows that 86% of customers say they are willing to deal with HMRC digitally … Read more

Government Response Summary

The government agreed with the committee's recommendation to consider HMRC's resourcing as part of the Spending Review to further digitise customer services and enable more customers to self-serve online, and will publish a Transformation Roadmap in 2025 outlining plans to extend digital services and provide better customer service, including digital inclusion and support.

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10 Conclusion Accepted

HMRC secured additional funding for staff, achieving telephone customer service targets in 2024.

Conclusion

In May 2024, HMRC received £51 million additional funding, to cover approximately 1,500 staff for 2024–25, to bring its customer service to target levels for answering 85% of customers’ attempts to speak to an adviser on the telephone and for … Read more

Government Response Summary

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11 Conclusion Accepted

HMRC digital service usage and customer satisfaction have significantly increased since 2015.

Conclusion

HMRC said that approximately 70% of interactions with it are digital.21 Since 2015, it has introduced several digital services, including Personal and Business Tax Accounts, an app, and its flagship Making Tax Digital programme for VAT.22 In 2022–23, customers accessed … Read more

Government Response Summary

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14 Conclusion Accepted

HMRC consistently fails to meet targets for processing high volumes of postal correspondence.

Conclusion

HMRC received 22 million items of correspondence in 2022–23, including physical post and forms and interactive forms.37 Around 70% of correspondence comes in through the post. To process postal correspondence, as well as some electronic correspondence, HMRC must scan or … Read more

Government Response Summary

HMRC states it has made significant progress in telephony and correspondence service performance during 2024-25, and government funding for 2025-26 will enable it to maintain these service standards.

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19 Conclusion Accepted

HMRC's tax gap increased to £39.8 billion, driven significantly by small business non-compliance.

Conclusion

HMRC estimates that the tax gap–the difference between the amount of tax that should be paid to HMRC, and what was actually paid–increased from £38.1 billion in 2021–22 to £39.8 billion in 2022–23 (the latest year for which HMRC has … Read more

Government Response Summary

HMRC will set stretching annual compliance yield targets with Ministers, including the expected £6.5 billion in 2029-30 from measures announced at Autumn Budget 2024.

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20 Recommendation Accepted

HMRC unable to quantify the direct impact of additional revenues on the total tax gap.

Recommendation

HMRC was unable to say what impact the additional revenues it expects to bring in would have on the tax gap. It said it is not practical to set a target for the tax gap as it is measured more … Read more

Government Response Summary

HMRC will set stretching annual compliance yield targets with Ministers, including expected additional tax revenue from measures announced at Autumn Budget 2024, estimated to generate £6.5 billion in 2029-30.

HM Treasury

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22 Recommendation Accepted

Significant decline in criminal tax prosecutions risks reducing the deterrent effect on non-compliance.

Recommendation

In 2023–24 there were 344 criminal prosecutions, compared with 691 in 2019–20, before the pandemic.64 HMRC said it is very successful in its criminal investigations and has a high conviction rate in its prosecutions, but that it tends to reserve … Read more

Government Response Summary

HMRC will increase counter-fraud capability and expand work to address fraud, publishing an updated Issue Brief articulating its ambitions and areas of likely focus, and considering the associated uplift in positive charging decisions.

HM Treasury

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