ICAEW.com works better with JavaScript enabled.

TAX NEWS

HMRC’s performance during an exceptional year

Article

Published: 13 Jul 2021 Update History

Ahead of its full annual report, HMRC has published performance statistics for 2020/21. ICAEW acknowledges what HMRC has achieved in its response to the pandemic while noting that concerns over performance persist which suggests that there are fundamental problems.

HMRC’s annual report for 2020/21 has been delayed until the autumn but in the interim it has published provisional performance statistics and a commentary; ICAEW welcomes the transparency provided by this interim publication.

Call handling

The deterioration in call handling performance – from an average waiting time of 6:39 minutes in 2019/20 to 12:04 minutes in 2020/21 – will attract the most attention. ICAEW members using the agent dedicated line (ADL) experienced an even greater deterioration as average waiting time increased to 17:11 minutes, up from 10 seconds in the previous year. This was a result of priority being removed from the ADL in March 2020, before being restored in June 2021.

Priority was instead given to the COVID-19 helpline; HMRC has revealed that more than 5,000 staff were moved on to that helpline and that the average waiting time was 3:06 minutes in June 2020 and had improved to 1:16 minutes by March 2021.

Performance on the percentage of callers that wait more than 10 minutes continues to be extremely poor, at 45% for 2020/21, an increase from 30% in 2019/20.

ICAEW’s Tax Faculty recognises that HMRC is still having to allocate significant resource to the COVID-19 helpline and to EU exit work. However, the last time that HMRC met its targets of average call waiting time of less than five minutes and no more than 15% of callers waiting for more than 10 minutes was 2017/18, which suggests that there are fundamental problems.

Correspondence

HMRC’s performance in handling correspondence has also suffered, bearing out reports from ICAEW members about delays across most HMRC services but in particular the processing of registrations, agent authorisations, tax returns and repayments.

HMRC has recently assured ICAEW that it is making significant progress with clearing backlogs and that it is close to getting up to date. Members may have observed recent correspondence being dealt with before older items; this is because HMRC has ring-fenced some backlogs and is dealing with them separately from current mail.

HMRC’s target to deal with 80% of post within 15 working days has also not been met since 2017/18 (2020/21 64%, 2019/20 70%).

HMRC debt collection and compliance activity

HMRC collected £585bn during the year – lower than the £633bn collected in 2019/20 but broadly in line with OBR forecasts.

The policy decisions made by the government during the pandemic had a significant impact on the amount of debt held by HMRC. At the end of March 2021 HMRC held £58bn of debt, about £35bn more than in March 2020, but £8bn less than at the end of December 2020. More than half this debt is attributable to deferred VAT and self assessment payments. HMRC recently confirmed its message to taxpayers which is: “If you can pay your taxes then you should do so – but if you’re struggling, we want to work with you to agree a plan based on your financial position”. HMRC expects to restart debt enforcement activity from September 2021.

The yield from HMRC compliance activity of £31bn has held up well despite reduced resources being available. The compliance yield for 2019/20 was £37bn, but HMRC has indicated that the 2019/20 figure was skewed by a small number of very large, one-off successful cases during that year.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty
ICAEW Know-How from the Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.