HMRC ‘lacks contingency plan’ for slow uptake of digital tax service

MPs have voiced concerns about the extent to which HMRC is relying on new digital services to reduce demand at its call centres – without a backup plan.

MPs have told HMRC to come up with a Plan B in case uptake of digital tax is lower than expected – Photo credit: Pixabay

The influential Public Accounts Committee said that the tax authority was “staking a great deal” on the success of its plans to further digitise the tax system, but had not agreed contingency plans with the Treasury for the resources it would need if call centre demand did not reduce in line with its expectations.

In its annual report on HMRC’s performance in 2015-16, the committee noted that the push for digital comes at a time when the department is facing “an enormous challenge to maintain services”.

This includes efforts to deliver £98m in spending cuts, continued work to replace the £10bn Aspire IT contract and the relocation of staff to 13 new regional centres.

It also noted that HMRC had lost chief digital and information officer Mark Dearnley as a “result of market pressures” and that the departure of further key staff would “damage HMRC’s capacity to deliver transformation and manage the risks when its IT contract ends”.

This echoes comments made by the committee during the summer – before Dearnley’s departure – when it said that the replacement of the Aspire contract, the largest single ICT contract in all of government, needed “firm and consistent leadership”.

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The PAC’s annual report, published today, raised the spectre of the agency’s 2014-15 decision to reduce its headcount by 5,600, only to recruit 2,400 additional staff the following year after customer service for personal taxpayers collapsed.

HMRC’s current Spending Review-mandated plans involve reducing its customer service workforce by around a third.

Under HMRC’s digital ambitions, more roles are set to be automated, allowing a higher proportion of staff to undertake tax avoidance or evasion work.

In September, the digital programme manager for paperless HMRC, Mark Holl, announced that the department had cut down call-handling times by two minutes – or 40% – by automating manual processes.

However, the PAC report said: “HMRC is staking a great deal on the success of its plans to digitise the tax system, but once again it lacks an adequate plan if demand for its call centres does not reduce as quickly as it hopes.”

It said that, by March 2017, HMRC must demonstrate that it has a credible plan to make savings without damaging customer service, and that it had agreed a contingency plan with the Treasury should its projections prove to be inaccurate in practice.

Committee chair Meg Hillier said that the public and parliament had high expectations of HMRC and the “vital role” it played in national life, but added that MPs were unconvinced of HMRC’s ability to deliver its digital shift.

“The lack of a convincing fall-back plan to safeguard service as HMRC undergoes significant change remains a looming threat to its ability to collect tax from individuals simply trying to pay their fair share,” she said.

“HMRC’s senior management cannot afford to be complacent about the catastrophic collapse in customer service in 2014-15 and the first half of 2015-16, nor about what is at stake should their projections about demand for call centres prove wrong.

“Contingency planning should not be an optional extra. By the spring we will expect to see evidence that HMRC has agreed measures with the Treasury to ensure it is not left playing ‘catch-up’ at taxpayers’ expense.”

Public and Commercial Services union general secretary Mark Serwotka said the report underscored HMRC’s poor track record at service transformation.

“The committee again makes it clear that cutting too many staff in HMRC damaged the service provided to taxpayers, yet the department is absurdly pressing ahead with plans to close 90% of its UK offices and axe thousands more employees,” he said.

“There is now an overwhelming case for these plans to be halted to allow for a proper public debate and parliamentary scrutiny of the kind of revenue collection service we need and the staff and resources it will take.”

A spokesperson for HMRC said the department had “invested heavily in customer services, recruiting more than 3,000 new staff who are also available outside normal office hours”.


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