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HMRC: Tax Returns

Volume 835: debated on Wednesday 10 January 2024


Asked by

To ask His Majesty’s Government what assessment they have made of the HMRC services to the public in processing tax returns.

My Lords, HMRC is responsible for collecting income tax, value added tax and a range of other taxes and duties. Tax returns are required to ensure the timely payment of the right amount of tax. The vast majority of returns are now submitted online, with information and guidance also available, plus a web-chat function. The satisfaction rate for digital services for the year to October is 83.6% and is higher than the rate for telephone services.

I thank the Minister for her Answer. My Question is about the running of the HMRC. As we all know, December and January are the busiest time of the year for people and their agents to return their tax files. As from 11 December up to 31 January, HMRC says that the self-assessment helpline will deal only with the most complex and priority cases. My first question is how the HMRC will know whether it is a complex and priority case if it does not answer the phone. The decision has been criticised by accountants and tax advisers as being very poor. Some callers say that they have been cut off without anyone answering the phone. What happens if they do not have computers or are not skilful in using them? Secondly, for the past 13 years the taxes have gone up, but the number of HMRC staff has come down in the past five years from 25,500 to 19,500. How do the Government justify HMRC’s poor services to the public?

If the noble Lord does not mind, I shall focus on the first part of his question, because it is very important. If a person phones the self-assessment helpline, what happens is that one gets asked what one’s query is. Of course, if the computer recognises this, and if it is a simple query—of which two-thirds are, not related to tax returns currently in process—one is directed to the digital services. One also might receive an SMS with a link to the specific service that one might need. At that point, the customer can also use the digital assistant or web-chat service. The noble Lord mentions vulnerable and digitally excluded people, and they are exactly the people that this intervention is hoping to include. It will allow the HMRC to focus on 120,000 more people, which will include the vulnerable and digitally excluded. Of course, through that process of triage, they will be able to stay on the system and speak to a person.

Will my noble friend tell us how many HMRC staff are working from home and how many are attending the workplace?

HMRC is an office-based organisation. However, officials can work from home for two days a week, if they can be fully effective in their roles. On average, advisers answer the same number of calls per day and work the same number of hours, whether they are in the office or at home.

My Lords, I wonder whether the Minister is aware that so many people have become so intimidated and discouraged by the process of trying to claim a tax repayment that an industry has grown up. Tax repayment agents and companies are now stepping in as middlemen to provide that service to people, but there is no professional standard or certification, and there is no regulation of any of these bodies—so the potential for people to be abused and scammed is very great. Are the Government going to take action to deal with this, either by improving the service so that these people are not needed or else by regulating them if they are?

The noble Baroness may be aware that the HMRC made a very targeted intervention on overpayments over the summer, to enable a backlog that had arisen to be repaid. That is now cleared, and the self-assessment helpline prioritises queries relating to returns, repayments and other complex matters.

My Lords, after Making Tax Digital, the HMRC expects small businesses and self-employed people to file returns and so on using approved accounting software. What consideration has HMRC given to the Horizon accounting software scandal? What steps are being taken to ensure that such software does not contain unexpected flaws?

There is actually a very competitive market in software that is able to speak to the HMRC system. No flaws have yet been found, but of course one is always aware of that.

My Lords, further to my noble friend’s first Answer, has she actually tried ringing the HMRC herself, and what was the outcome?

My noble friend will be very pleased to know that I phoned HMRC on Monday and eventually managed to speak to a person. I did not tell them who I was, and I do not have very complex tax affairs. It was something very simple, but it could be done only by a real person.

My Lords, it is very interesting that the Minister here is defending an IT system installed by Fujitsu, after what we heard about the scandal at the Post Office. Coming back to the broader issue, as a result of fiscal drag there are more people filing self-assessment tax returns. Can the Minister tell us how many more people have been employed to handle the telephone queries? I have tried and I was unable to get through at all.

First, let me clarify that I am not defending Fujitsu or any other software— I am not sure where the noble Lord got that from. It is the case that more people will be filling in self-assessment tax returns, but it is also the case that, given the current figures, it seems that people are perfectly capable of doing so. By 1 January, 6.49 million people had completed their self-assessment tax return; that is 200,000 more people than last year and well over half of those whom we would expect by this stage, so at this current time we are not seeing a significant drop-off of people being unable to fill in a tax return.

My Lords, is my noble friend aware that, having seen the Question on the Order Paper, I contacted a number of professional accountancy firms to ask them whether the returns from HMRC are comparable to last year or not? The consensus appears to be that HMRC is running at least four to six weeks behind last year. Is there a particular reason for this?

No, and I would be very happy to look at any evidence that my noble friend has. My understanding is that, for more complex tax matters which require the intervention of an HMRC adviser, those tax returns are dealt with within about three months.

My Lords, someone I know made an application online for information 15 months ago and has not yet had a reply, so I am wondering what happens online.

Without further information about that case, it would obviously be very difficult for me to comment. If the noble and learned Baroness would like me to pass her friend’s information to HMRC, I would be very happy to do so.

My Lords, when my noble friend telephoned, as she said in answer to my noble friend Lord Forsyth, how long did she have to wait before she had a proper answer?

That is an incredibly good question. I think I was probably waiting for about 20 minutes. Of course, I had no problem with that because I was able to do other things. Had I been online, I might have been googling as well, so I think there is a case to be made for ensuring that calls are triaged such that we can prioritise those customers that we need to get through the system as quickly as possible. As I say, HMRC hopes to be able to address the issues of 120,000 more people than it would otherwise have been able to do.

My Lords, the Government’s decision to freeze national insurance and income tax thresholds for six years will cost taxpayers an additional £45 billion, equivalent to a 10 percentage point increase in the main rate of national insurance. This fiscal drag means that 4 million more people will now pay income tax. How many additional taxpayers will be required by HMRC to complete self-assessment tax returns in the next five years as a result?

HMRC is well aware and has forecasts for how many people will be filling in tax returns or required to pay tax. It is prepared and has the workforce ready to do so. But I would ask the noble Lord how many more HMRC advisers it will take to collect the tax for the £28 billion a year that Labour intends to spend.

My Lords, is HMRC gearing up for the potential problems that will arise because of fiscal drag, as has been mentioned, and the triple lock on state pension benefits and its impact? Income tax is not deducted from state pension benefits directly and has to be paid separately, and many people on state pensions have low incomes and will receive demands to pay their unpaid tax the following year. Is the Minister on board with that, and are we going take action to make sure that people on low incomes do not receive large tax demands to be paid from their low state pensions?

As I have said previously, HMRC is prepared for the type of people that may or may not be in the tax system in the future. At the heart of all this is communication. HMRC sends out tens of millions of messages to people each year. It has a social media campaign and also campaigns in the press to ensure that everybody understands how they can pay the right amount of tax at the right time.