MPs are skeptical of the impact on HMRC’s digital customer service | Aici

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The UK is missing £42bn in unpaid tax because HM Revenue and Customs is not using enough resources to improve compliance, the parliamentary spending watchdog has said.

Both tax compliance and customer service are suffering because HMRC has too few staff working to improve efficiency, according to the latest report by the Public Accounts Committee.

HMRC has announced that it aims to improve its customer service through digital systems and encouraging people to use online tools.

However, the MPs said they were “not convinced that their plan will reduce demand on traditional channels or deal with the unacceptable level of service that taxpayers and businesses are currently suffering” .

“The transition to online services will not happen quickly and will not be suitable for all situations or customers,” they said.

MPs have asked HMRC to write to them explaining their plans to improve their customer service to an “affordable” level, including the metrics used to monitor performance; how to support customers who cannot use digital channels or prefer to communicate by post or telephone; and the arrangements that may be made if efforts to reduce the retention of these channels are ineffective or take longer than expected.

While the £731.1bn HMRC collected in tax and duty last year was the highest on record, the PAC said it was “still not deploying the resources needed to increase revenue collected or to provide acceptable customer service”.

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The £42bn in unpaid tax is around 5% of the total annual debt. In a report which also criticized HMRC for a lack of “motivation” to tackle fraud and error, MPs pointed out that the 2021-22 tax gap is the same as last year. 2019-20.

HMRC bases its success in compliance and funding on maintaining, not reducing, the tax gap.

The MP argued that compliance spending is cost effective because for every £1 that HMRC spends on compliance activities it receives £18 in additional revenue. Just putting enough resources – including staff – into compliance work to maintain the current gap means the government “doesn’t lose billions”, they said.

The committee challenged HMRC to say what level of investment in its compliance team is needed to reduce the tax gap – and whether it intends to do so.

“The £42 billion owed to HMRC in unpaid tax could fill the notorious black hole this year. But the public purse will still lose millions in revenue as HMRC will employ more staff to deal with compliance over the next few years – it is not fast enough to reduce the tax gap at a time of huge pressure on government spending. At the same time, taxpayers are struggling with customer service that needs improvement,” said committee chair Dame Meg Hillier.

MPs also raised concerns about funding for customer services, saying staff cuts have reduced the level of service HMRC provides to taxpayers.

In the last five years, it has reduced the number of tax officers from 25,500 to 19,500, with MPs saying that not having “enough” staff in the area was part of the reason for the decline. HMRC’s response to calls and posts. questions during the pandemic.

“We were surprised to learn that sometimes HMRC simply shut down their phones when they couldn’t handle requests. It is unacceptable not to respond to the calls of people who want to pay public money,” said the report.

These comments came soon after PublicTechnology announced that, following a five-day outage last month in which the department estimated 100,000 calls were missed, HMRC had brought in external consultants to assess the resilience of its contact center platform.

Elsewhere in the report, the PAC reiterated its concerns about HMRC’s approach to fraud and error. The tax agency expects to recover a quarter of the £4.5bn lost in the Covid support scheme – and MPs said they had “still shown they did everything they could to recover the losses and avoid the loss of public money.”.

“HMRC is likely to reward dishonest taxpayers without pursuing more losses than currently planned,” the report said.

An HMRC spokesman said: “Since 2005 we have cut the UK tax gap by over 30%, and we continue to make collecting unpaid tax a priority.”

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