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News : Bungling HMRC May Have Left 3M Paying Wrong Tax
London, UK, May 25, 2016 -- More than three million people may have been left paying the wrong amount of tax thanks to a computer meltdown at HMRC, a damning report reveals today.
The National Audit Office warned that the customer service levels at the tax office have ‘collapsed’ following the sacking of thousands of call centre staff in a botched attempt to move services online.
As a result, the number of ‘outstanding discrepancies’ in HMRC’s files has almost doubled from 2.4 million in March 2014 to 4.6million as of March last year.
Of these, 3.2 million are classed as ‘high priority’ cases – meaning there is a ‘risk employees will have paid the wrong amount of tax’.
In a scathing report, the public spending watchdog said that the HMRC’s cuts had caused misery for millions of ordinary people unable to get through to a helpline operator. It found that:
- Around 4.2 million phone calls to HMRC were abandoned last year by taxpayers fed up of waiting on hold;
- Waiting times on its helpline tripled between April 2014 and October last year;
- Average waiting times soared to 47 minutes as taxpayers rushed to file their paper tax returns before the self-assessment deadline on October 31. Some were forced to wait on hold for more than hour;
- After sacking 5,500 staff, it was forced to hire 2,400 new staff last autumn to man the phones;
- The cost to those who called the helpline – phone bills and the economic cost of time wasted – soared to £97million. Consumer campaigners last night warned the meltdown could lead to a surge in the number of people receiving a shock tax bill for underpaid tax.
Others may have been paying too much tax for years.
And debt charities warned that the lengthy waiting times could have pushed more people into debt as they are fined for filing their tax returns late.
The criticism is acutely embarrassing for HMRC’s long serving former boss Lin Homer, who was made a dame in the New Year’s Honours list. She was replaced as chief executive by Jon Thompson last month after four years in charge of HMRC.
Mark Garnier, a Conservative member of the Treasury committee, said last night: ‘The fact that HMRC is making even more mistakes is shocking.
‘This is an appalling indictment of the poor level of service at HMRC. People who play by the rules need to be confident that they will be treated well. HMRC needs to be less unpleasant to deal with.’
HMRC has come under intense pressure from the government to cut its bloated budget.
The main thrust of its strategy has been forcing taxpayers deal with it online, rather than speaking to an operator.
This has involved encouraging people to file their self-assessment tax returns over the internet rather then sending them by post, and providing more advice on its website to discourage people from using its helpline.
This aggressive online push resulted in it shedding 5,500 call centre staff in 2014 and closing dozens of tax offices.
But according to the NAO, the move backfired as the demand from taxpayers wanting to speak to a call centre did not drop – meaning call centre waiting times rose sharply.
In total, HMRC has shed 11,000 staff between 2010 and 2015.
But Sir Amyas Morse, the head of the NAO, accused HMRC of getting its ‘timing badly wrong’ and said it fired staff before its new online systems were ‘working reliably’.
As a result, it was forced to parachute in 2,400 staff last autumn to man its helplines.
Those left waiting on hold – in some cases for more than an hour – were saddled with a £97 million bill in the 2015/16 tax year – up by more than half from £63 million in 2012/13.
This included £10 million in phone charges and the £87million economic cost of wasting time.
The auditor calculated that taxpayers incurred an extra £4 in cost for each £1 saved by the HMRC by sacking call centre staff.
Consumer campaigner Martin Lewis, founder of Moneysavingexpert.com, said: ‘The staggering confusion at HMRC means millions of people might be paying the wrong tax.
‘Many people are going to get a huge shock when they receive a bill for unpaid tax in the post.’
Yesterday the NAO said the level of service provided by HMRC had improved when it brought in more staff last autumn.
Call waiting times also improved to an average of five minutes for self-assessment callers during the deadline week for online returns in January 2016.
Posted by Veronica Silva Cusi, news correspondent
Today's Tip of the Day - Where Is The Problem?
More Editorial From H.M. Revenue & Customs (HMRC)
About H.M. Revenue & Customs (HMRC):
HM Revenue & Customs (HMRC) was formed on the 18 April 2005, following the merger of Inland Revenue and HM Customs and Excise Departments. HMRC ensures the correct tax is paid at the right time, whether this relates to payment of taxes received by the department or entitlement to benefits paid.
Published: Thursday, May 26, 2016