Members of Parliament (MPs) are hammering HM Revenue and Customs (HMRC) over myriad service failures. In their views, they highlight extended call wait times and the increasing complexity of the tax code as primary issues. Callers looking for help, though, have to wait an average of more than 23 minutes. The purpose of this long hold is angering millions of taxpayers who cannot get quick assistance when they need it.
In addition to long wait times, HMRC has faced scrutiny regarding its ambitious Making Tax Digital programme, which aims to modernize the tax system. Critics argue that this program has imposed hundreds of millions of pounds in unnecessary costs on taxpayers. The groups criticize it for failing to truly accelerate or streamline processes as promised.
The Public Accounts Committee (PAC) highlighted the challenges that HMRC faces. In particular, they made sure to target the challenges that existed around processing tax refunds. HMRC is still processing claims that were entered as late as March 17. They warn that it may take over four months for people to receive refunds for any overpaid tax or national insurance. This situation has raised concerns among small business owners and individuals who rely on timely refunds for their cash flow.
Ainscough, a communications director for a small business advocacy group, said she was exasperated by the wait times.
“We are being told they are going to need to wait until August for the funds to be released, for a request we put in [in March]. I’ve never experienced this … Why has it jumped so significantly?” – Ainscough
The move to third-party software, required by HMRC, has come in for severe criticism. Taxpayer Experience Most taxpayers have been driven out of IRS’s system and into these outside programs, which has allowed certain software companies to profit off this requirement. Ainscough highlighted the impacts of this shift on small businesses.
“If the backlog is that big, it suggests a high volume of claims and a potentially substantial sum of money that is owing to small businesses and individuals at a time when cashflows are critical.” – Ainscough
In recognition of these worries, a spokesperson for HMRC recently admitted the difficulties that will be caused by making the change to third-party software.
“Most people have already been forced on to third-party software.” – Ainscough
The spokesperson further defended the decision to increasingly phase out HMRC’s current free online service for small firms to file straightforward company tax returns and accounts, by March 2026. They told them that this service was introduced in 2015 to assist small businesses in moving to online filing when few software solutions were available.
“This transitional service was introduced in 2015 to help small, unrepresented companies switch to online filing when there was a limited software market.” – HMRC spokesperson
They went on to elaborate on why they were closing this public service, sharing only the…
“It’s right that we close this outdated support now that there’s a range of commercial software which provides a much better service, and we’ve published guidance to help companies prepare for the change.” – HMRC spokesperson
Despite these changes, satisfaction with HMRC remains quite high among customers, at around 80%. Too many taxpayers—including the businesses and individuals that are the IRS’s customers—find their experiences fall far short of that rosy average. A reader commented on the withdrawal of the online service, saying:
“The online service was simple and fairly straightforward … It seems an incredibly retrograde step to withdraw it.” – A reader
To improve response times for refund claims HMRC yesterday tweeted response We will be assigning extra staff to speed up processing response times.
“We’re tackling response times for these refund claims by allocating extra staff to work on them.” – HMRC spokesperson
HMRC is under enormous pressure to change how it delivers services following unprecedented changes to its delivery. Now, lawmakers and the public are applying increasing pressure to reverse this tide on the organization. The agency’s unexpected funding settlement will ensure it meets all service standards by 2025-26. There is a lot more to worry about that taxpayers cannot see, as the ongoing changes continue to unfold and take hold.