HMRC in the firing line

One of the most alarming findings highlights that over a third of callers attempting to speak with an HMRC adviser last year were unable to get through, with 33.6% of enquiries going unanswered.

The report catalogues a series of management failures at HMRC, including a troubling trend of cutting off callers after long wait times, with many reportedly waiting over an hour. The lack of a call back option has also been noted as a significant shortcoming. This comes despite HMRC receiving £51 million in funding to enhance its telephone service capabilities last summer, yet performance levels have continued to decline.

"There is an evident disconnect between HMRC’s resource claims and the reality for taxpayers," said Charlene Young from AJ Bell. Many taxpayers experience frustration and confusion when trying to clarify aspects of the complex tax system, particularly during peak periods.

Amid the current economic climate, where inflation and interest rates are significantly higher than in recent years, the stakes are increasing for taxpayers. Missed self-assessment deadlines can lead to penalties that accumulate more quickly than they might have in the past. The report indicates that, as a result of HMRC’s resource issues, millions have faced penalties for late filings. The previous tax year saw around 280,000 individuals incurring late filing penalties, amounting to nearly £98 million.

The government’s recent reforms, including cuts to capital gains tax allowances and alterations to inheritance tax treatment, are expected to further increase the number of taxpayers engaging with HMRC, exacerbating the pressure on an already strained system. The ongoing freeze on income tax bands and allowances is also drawing more individuals into the tax system.

In light of these findings, analysts warn that HMRC needs immediate intervention and structural changes to ensure taxpayers can fulfil their obligations without facing unnecessary barriers or penalties. The failure to address these issues threatens to further undermine public trust in the tax collection system during an already challenging economic period.