HMRC Under Fire for Poor Customer Service and Widening Tax Gap

Red Telephone Booth, London, UK | photo by Burst

The UK’s House of Commons committee has issued a critical report on HM Revenue and Customs (HMRC), outlining its declining customer service standards and challenges in addressing the country’s growing tax gap. The government now has two months to respond to the committee’s recommendations.

HMRC FACES CRITICISM FOR CUSTOMER SERVICE FAILURES

The report highlights a concerning deterioration in HMRC’s ability to support taxpayers effectively. In the 2023–24 period, HMRC managed to answer only 66.4% of customer calls directed to advisers, falling significantly short of its 85% target. Average call waiting times stretched beyond 23 minutes, with no callback options or accurate waiting time estimates provided.

While HMRC has attributed these failures to inadequate resourcing for telephone services, critics argue that the department has also failed to provide effective digital alternatives. There is concern that HMRC has deliberately downgraded its telephone services to encourage taxpayers to use digital channels, a strategy that has undermined public trust. Abrupt helpline closures and unexplained call disconnections after long waits—sometimes up to 70 minutes—have only deepened frustration among taxpayers.

DOUBTS ABOUT DIGITAL SERVICES

HMRC has increasingly relied on digital solutions to address its customer service shortcomings, but the committee’s report casts doubt on their effectiveness. Despite assurances about the quality of its digital tools, HMRC received 37 million calls in 2023–24, with 66% of those cases reportedly suitable for resolution online. This significant call volume raises questions about whether HMRC’s digital services truly meet the needs of taxpayers.

The department has announced plans to publish a roadmap in Spring 2025 to further enhance its digital offerings. However, similar commitments in the past have yielded limited progress, leaving critics skeptical about HMRC’s ability to deliver meaningful improvements.

TACKLING THE TAX GAP

In addition to customer service concerns, HMRC is under scrutiny for its handling of the UK’s growing tax gap, which reached an estimated £39.8 billion in 2022–23, representing 4.8% of total tax liabilities. Closing this gap has become a strategic priority for HMRC, which has secured funding to recruit 5,000 additional compliance staff and 1,800 debt management specialists.

Despite these additional resources, the committee has called for a more assertive approach to tackling tax abuse. It urged HMRC to pursue cases of criminality more rigorously, bring more prosecutions where appropriate, and target wealth hidden offshore. Strengthening debt recovery efforts was also highlighted as a critical area for improvement.

BALANCING ACHIEVEMENTS AND CHALLENGES

While HMRC has earned praise for successfully finalizing its accounts before the summer recess—an achievement given its scale and complexity—its broader performance leaves room for significant improvement. The report underscores the urgency of addressing customer service failings, restoring public trust, and taking bold steps to close the tax gap.

As HMRC prepares for the challenges of 2025 and beyond, it faces mounting pressure to rebuild trust and deliver more effective services for taxpayers. The government’s response to the committee’s recommendations will be a crucial step in determining the path forward for the department.

SOURCE/ RECOMMENDED READ:

• HMRC Customer Service and Accounts