Victoria Atkins MP, the recently appointed Financial Secretary to the Treasury (FST), has inherited an in-tray that includes poor HMRC performance standards and renewed calls to review the MTD ITSA timeline.
Ahead of the Autumn Statement on 17 November, CIOT president Susan Ball wrote to Atkins in a punchy letter to urge the new administration to treat these pressing issues as a priority.
“We believe that unless these are addressed, the tax system will become less efficient, harder to comply with and less effective in both raising revenue and supporting taxpayers,” wrote Ball.
Poor HMRC Performance
Top of the list for the CIOT was for the government to prioritise investment in HMRC’s performance. Ball cut straight to the heart of the matter: “HMRC’s performance standards are falling badly short.”
The list of problems is extensive. In one example, Ball informed Atkins that there are people and businesses who have waited for tax refunds for over nine months. She explained that this is where an immediate repayment was required by law.
The CIOT, alongside other tax bodies, raised concerns about HMRC’s service levels back in July in a letter to the tax department’s director general customer services. The letter catalogued a number of delays that their members are facing when dealing with HMRC, including with self-assessment registrations and refunds, correspondence about VAT grouping, the option to tax and much more.
Ball noted that while the problems listed still continue, new ones have also emerged as HMRC resources are redeployed elsewhere.
The erosion of HMRC’s service levels has become a common complaint on AccountingWEB’s Any Answers forum. At a representative bodies steering group, the CIOT and the Low Income Tax Reform Group (LITRG) told HMRC of the impact these poor service levels are having on agents’ mental health and how this adds to the wider pressures already felt by agents due to workloads, as well as recruiting and retaining staff.
HMRC’s poor service levels were illustrated in the July to September performance data, where the average call wait time was recorded at around 14 minutes. While this number has fallen from 15 minutes in the previous quarter, it is still a far cry from the pre-Covid-19 target of five minutes.
Elsewhere, the percentage of calls answered is still underperforming at 77% against a target of 85%. However, the percentage of correspondence turned around within 15 days has surpassed the previous quarter’s 64% to 77%.
“At times, some of our telephony services and correspondence turnaround times have been affected by high demand and other factors – and we’re sorry that some customers and agents have experienced delays when dealing with us,” said HMRC in the performance update, blaming factors such as extremely high volumes of repayment claims (90% more than usual) and IT issues.
Not Fit For Purpose
As HMRC services underperform, CIOT’s Ball underlined the issue at hand: “It is not simply that targets are being missed. Some targets are not fit for purpose even if met.”
She added: “We are concerned that staff numbers within HMRC are being cut in anticipation of securing savings from digitalisation when these savings have not yet been realised, with the result that delivery of existing performance standards has been compromised.”
Ball called on Atkins to go beyond simply maintaining HMRC’s current standards and roll out a “more ambitious mandate to improve standards of basic performance” which would include answering telephone queries, dealing promptly with correspondence, investigation and compliance activity and timely processing of new tax registrations and agent authorisations.
Ball also turned her attention to MTD and renewed her call from September to review the digital programme.
She expressed “serious concerns” about the current timetable for MTD ITSA, saying that achieving the 2024 start date is “becoming unrealistic”.
She basked in principle the idea of tax digitalisation and benefits it will bring to the tax systems, but outlined three areas that putting pressure on the scheduled timetable:
- MTD obligations are not yet clear and there remain significant technical challenges
- Limited choice of approved software available to taxpayers; and
- The limited number of taxpayers taking part in the pilot
She added: “It is more important to get this right than to stick to previously announced timescales.”
Simplify The Tax System
The final area of improvement related to both HMRC service and MTD – the complicated tax system.
Ball said, “A complicated tax system is harder to digitalise, as well as making it more challenging for HMRC to administer it effectively.”
In response to this, Ball recently wrote to the Chancellor to retain the services of the Office of Tax Simplification (OTS) after the ex-Chancellor Kwasi Kwarteng abolished the body in the mini-Budget. The CIOT president echoed this call in the letter to Atkins, highlighting that closing the OTS would be “unwise”.