Is poor customer service at the Revenue costing us money?

We need to know whether HMRC's poor customer service in not answering the phone is reducing tax revenues and increasing collection costs.

Ashwin Kumar is the director of Liverpool Economics Ltd.

With more than a quarter of calls not answered in 2011/12, HM Revenue & Customs has a long way to go to meet acceptable standards of customer service.

But while the NAO tell us how poor service is costing customers £136 million a year, they don’t say anything about the likely effect on tax revenues. Surely we need to know whether HMRC not answering the phone is reducing tax revenues and increasing collection costs?

According to today’s report (pdf) from the National Audit Office, HM Revenue & Customs only answered 74% of its calls from the public in 2011/12. And even this figure might be an overestimate because it includes those who hung up during the automated message.

It is somewhat depressing to note the organisation may claim this as a success as they exceeded the distinctly unchallenging target of 58%.

Not only is the Revenue guilty of aiming so very low, but in many important areas of customer service there are no targets at all. For example, there is no target for answering calls within a specified time; no standards for online services; and there are none for resolving queries first time or for measuring customer satisfaction when people actually get to deal with the organisation.

It is welcome the report also says how much these failings are costing members of the public with the Revenue’s continued use of 0845 numbers (horrendously expensive from mobiles) rather than 0345 numbers adding to the problem. The additional time taken for the Revenue to answer the phone costs members of the public £33 million in phone bills and an estimated £103 million in wasted time.

But it is a shame the NAO didn’t look into the likely effect of poor customer service on tax collection rates and collection costs for the Revenue. There is precious little research around, and certainly none I can find by the Revenue itself, that attempts to draw the financial link between bothering to answer the phone to potential taxpayers and the costs and effectiveness of revenue collection.

If punters trying to navigate our notoriously complicated tax system are even slightly less likely to fill out their tax returns correctly or to need more back and forth chasing from Revenue officials, I suspect the £136 million of direct customer costs from poor service would quickly be dwarfed by the costs to the exchequer.

22 Responses to “Is poor customer service at the Revenue costing us money?”

  1. Patrick

    To read articles like this you’d think that HMRC staff are sitting in the office with their feet up on the desk surfing the net whilst the phone rings. The reason they don’t answer the phone is because there aren’t enough staff and enough phones to deal with the volume and length of calls. How do I know? I used to work there.

    Let’s not forget that it was the last Labour government that merged the Inland Revenue and Customs & Excise in a horribly mismanaged debacle that led to the the worst levels of staff morale ever recorded and the terrible customer experience that has been going on ever since. The last Labour government slashed staffing levels in the merged organisation in an attempt to cut costs and save money. This is the end result.

    No-one like paying tax and no-one likes dealing with the tax authorities. This makes it easy for lazy journalists to write crowd pleasing headlines about those terrible people at HMRC, whilst the real truth is the Labour government behind the merger and the staffing cuts.

  2. Newsbot9

    So you’re saying that the conservatives have increased funding for HMRC’s general staffing?

  3. Patrick

    Did I say that?

  4. Patrick

    But since you ask, the answer is yes. In Sept 2011 Danny Alexander announced that 2250 new tax inspectors would be recruited. 1000 of these new jobs were advertised in Sept 2011 alone.

    The Labour government shed 30,000 jobs in the merged HMRC. The Labour Party -friend of the public sector, committed to tracking down wealthy tax evaders.

  5. Newsbot9

    No, you didn’t. And there have been major cuts to HMRC, which has then seen small increases in specific areas, but haven’t helped it’s general operations.

    Your Tories have been wind and noise on this. And nothing else.

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