Would investment in HMRC’s customer services increase the UK tax take?
HMRC should commission research to measure how its investment in customer service boosts the country’s tax take, according to the Chartered Institute of Taxation (CIOT).
In its response to the Treasury’s Spending Review 2025, the CIOT welcomes the decision to extend extra funding for customer services until April 2026, but recognises that it is difficult to measure the impact that it has on levels of tax compliance.
According to a survey of members carried out by CIOT in summer 2023, 98% of respondents said that poor service levels had a ‘moderate’ or ‘significant’ negative impact on trust in the tax system, and 93% said they have a ‘moderate’ or ‘significant’ negative impact on attitudes to tax compliance.
Richard Wild, CIOT Head of Tax Technical, said:
“Our evidence suggests that better HMRC customer service will deliver better returns for the government and stronger economic productivity.
“But unlike compliance activity, it is harder to quantify the specific impact that every pound invested in customer service has on the amount of tax that is collected.
“The Spending Review is an opportunity to allocate funding to research and measure the rate of return on this investment.
“Approximately 95% of the revenues collected by HMRC is paid voluntarily. It’s time to see this investment in HMRC customer service as a benefit rather than an ongoing cost.”
Customer service concerns were the focus of a joint study by CIOT and ICAEW published in December. It found that problems with HMRC helplines and contact centres led to delays and increased costs for taxpayers, agents and HMRC.
It suggested that HMRC could save an estimated 1.7 million hours of call handlers’ time every year, or an annual saving of £36 million, if it implemented an automated tracking system for taxpayers to check the status of their correspondence.
Richard Wild added:
“A significant level of demand for HMRC customer service is driven by HMRC themselves, because of low resolution rates, slow progress or lost correspondence.
“The report's recommendations are practical suggestions which can deliver significant improvements for agents and taxpayers. We look forward to working with HMRC and the government to take forward our proposals in their work to improve customer service.”