Taxpayers seeking telephone advice from HM Revenue and Customs faced an increase in costs by around 50% and a collapse of customer service following staff cuts, auditors have said.
The National Audit Office said the quality of service for personal taxpayers was severely damaged in 2014-15 and the first seven months of 2015-16 after HMRC reduced staff numbers by a third.
Some taxpayers were left waiting for more than an hour for advice, according to a report released on Tuesday. For every £1 reduction in HMRC’s annual telephone transaction costs there has been approximately a £4 increase in the time and money spent by customers, it said.
The findings will add to an overall picture of a government body that is failing to tackle tax avoidance by multinationals and the super rich, but is increasing the financial burden on the general public.
Gillian Guy, the chief executive of Citizens Advice, said that waiting on the phone for HMRC had left some people in debt.
“Long waiting times not only cause frustration and increase the cost of the call, but can also mean people miss important deadlines. For example if you don’t return your tax form on time you face a fine – which for some households can be an additional cost they can’t afford to pay,” she said.
The Public and Commercial Services union general secretary, Mark Serwotka, said: “This report is crystal clear that cutting thousands of jobs in HMRC damaged the service. HMRC is a textbook case of how good quality public services need investment not more cuts, and how austerity all too often ends up costing more than it saves.”
Between 2010-11 and 2014-15, HMRC cut staff numbers in personal tax from 26,000 to 15,000. The reductions was achieved in part by expanding HMRC’s digital services.
The tax authority introduced automated telephony and paperless self-assessment in 2013-14. However, demand for telephone advice did not fall and the quality of service deteriorated in 2014-15 when the full extent of the staff reductions took effect, the report found.
HMRC met its target to handle 80% of calls in only 10 weeks of the year, the report said.
Its performance deteriorated further over the first seven months of 2015-16. Average waiting times tripled compared to 2014-15 levels, peaking at 47 minutes for self-assessment callers during the deadline week for paper returns in October 2015.
Managers misjudged the overall impact of its complex transition and shed too many customer service staff before completing service changes, the NAO said.
“The quality of service provided by HMRC for personal taxpayers collapsed in 2014-15 and the first seven months of 2015-16 when average call waiting times tripled,” the report said. “Services have subsequently improved following the recruitment of additional staff but whether this performance is sustainable depends on HMRC achieving successful outcomes from its programme to make tax digital.”
The NAO estimates the overall cost incurred by customers who called the taxes helpline increased from £63m in 2012-13 to £97m in 2015-16. The estimate includes call charges at £10m, the value of customers’ time spent waiting to speak to an adviser at £66m and value of time spent talking to advisers at £21m.
Within this estimate, customers paid £2m less in call costs because HMRC reduced call charges by moving from higher-rate numbers to local-rate 03 telephone numbers in September 2013. An increase in the economic cost of time spent waiting for an answer or speaking to an adviser more than offset the saving, the NAO said.
Ruth Owen, HMRC’s director general for customer services, said the authority has recognised that it did not provide an adequate standard of service but has since improved.
“Over the past six months we’ve consistently answered calls in an average of six minutes, and have launched new online tax accounts and web chat for everyone,” she said.
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