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HMRC performance suffers due to diversion of resources

10 November: HMRC data reveals the extent to which service performance and compliance activity have been impacted by the diversion of resources to deliver COVID-19 support schemes.

It will not surprise members to learn that between April and September 2020 calls to HMRC were, on average, answered in 10 minutes 19 seconds and 42% of callers waited for more than 10 minutes. This was a deterioration on the equivalent figures of 6 minutes 39 seconds and 30% in 2019/20 although Q2 (July to September) was slightly better than Q1 (April to June).

The closing time for most helplines has been extended to 18:00, but the hours remain restricted and the agent dedicated line is not prioritised.

Quarterly performance data published by HMRC on 5 November also revealed a sustained impact on compliance yield and debt levels.

HMRC’s debt balance rose from £22.4bn in March 2020 to £69.5bn in September 2020. The majority of the increased debt balance, £37.8bn, is made up of VAT and self assessment payments on account that taxpayers were able to defer.

The debt balance is likely to increase further when self assessment liabilities come due in January 2021 and taxpayers arrange time to pay under the enhanced time-to-pay offer.

Meanwhile, HMRC’s compliance yield has fallen to £11.8bn (April – September 2020), from £21.0bn in the equivalent period in 2019. HMRC had forecast a fall in compliance yield, due to some very large cases investigated in 2019/20, but the focus of HMRC compliance activity on COVID-19 support schemes is expected to reduce the tax compliance yield still further.

The number of cases closed in the half-year has dropped to 87,000 from 139,000 in the equivalent period.

HMRC staff have been on the front line in this time of crisis and have designed and delivered the government’s COVID-19 support schemes (in their many different iterations) and provided much needed help to taxpayers.

They have risen to many challenges and deserve credit for their role, but it is coming at the cost, in terms of HMRC’s efficiency being impaired, rising levels of tax debt and how this will be repaid.