HMRC performance update: supporting customers in a changing economy
Today we have published our Annual Report and Accounts, and details of our performance for the second quarter of 2021 to 2022.
Today we have published our Annual Report and Accounts for 2020 to 2021 and our quarter 2 performance update for July to September 2021.
Together they show how we have continued to deliver our core services for the UK during exceptional circumstances. Since the start of the pandemic, we’ve protected jobs and incomes and provided cash flow boosts for businesses. Some of the necessary measures we took to support customers through the pandemic have had an impact on our performance in replying to customer letters and forms, and on waiting times on some of our helplines. We are now seeing customer service levels stabilise but we have further to go to get back to a pre-pandemic position.
Our performance during 2020 to 2021
Last financial year, despite the challenges of COVID-19, we collected £608.8 billion in tax revenues – the third highest total on record, and higher than initial forecasts at the start of the pandemic.
We achieved this whilst responding swiftly to urgent government priorities. We supported 11.5 million jobs through the Coronavirus Job Retention Scheme and 2.7 million individuals through the Self-Employment Income Support Scheme.
We also allowed businesses to defer almost 600,000 payments of VAT. By the end of March 2021, we also had 864,000 Time To Pay arrangements in place to support customers to pay what they owe in an affordable way.
At the same time, we played a vital role in supporting the UK through its transition out of the EU - keeping customs clearance times within usual service standards, introducing a 24/7 customs support service for urgent border issues and processing around 359,000 customs declarations through our Northern Ireland Trader Support Service. We also answered more than 70,000 calls on our customs and international trade helpline, expanding its capacity to allow us to answer calls with an average answering time of less than 5 seconds during the final month of the financial year.
We continued to deliver on our core purpose of collecting taxes and giving financial support to people. We successfully delivered our two busiest peaks of work: Tax Credits renewals in July and Self Assessment returns in January – and we ensured that vital support such as Child Benefit continued uninterrupted. Most of the interactions that customers have with us are digital, and on average across the year we saw record high customer satisfaction with our digital services of 85.2%. We also introduced a range of new digital services - increasing our webchat capability from 1 million chats in 2019 to 2020 to more than 3 million chats in 2020 to 2021.
We diverted 5,000 skilled customer service advisers to providing COVID-19 support because that is what individuals and small businesses needed from us most urgently. Our COVID-19 helpline handled 2.5 million calls during 2020 to 2021, with an average wait time of just 1 minute and 16 seconds by the end of quarter 4. But these necessary measures had an impact on waiting times on some of our other helplines, and we’re sorry about the inconvenience this caused to people at busy times.
Although our postal receipts fell overall, we experienced a 70% rise in P87 expenses claims from those working from home, and new claims (mainly through agents) for customers owed a tax refund for interest paid on their Payment Protection Insurance (PPI) repayments. The priority choices we have had to make during the pandemic led to work queues in some areas of our business rising beyond normal levels.
Stabilising customer service: April to September 2021
The pandemic response has continued to be a major priority for us since March and the COVID-19 support schemes still ran throughout the first six months of this financial year. There were 1.3 million employments still on furlough at 31 August 2021, and we paid out £11.6 billion in Coronavirus Job Retention Scheme claims between 15 March 2021 and 14 September 2021, taking the total to £69.3 billion since the start of the scheme. We have also paid a total of £27.7 billion in Self Employment Income Support Scheme grants to 2.9 million individuals since its launch up until 15 September 2021.
At the same time, we have seen more of our traditional demand return - so we have focused on balancing the need to deliver priority support alongside our core work as society and the economy begins to return to normal. We’re making choices about the work we prioritise so we can protect our essential services and the livelihoods of our customers.
Overall customer satisfaction with our phone, webchat and digital services remains strong at 83.1% from April to September. Service levels on some helplines and in our post clearance are not yet back to where they were before the pandemic, but we have reached a point of stability. The percentage of calls answered has gone up to 80.3% in quarter two from an average of 74.3% in quarter one – with webchats still stable at just over 92%. Our average speed of answer has reduced by 26% since the end of March, standing at 13.38 minutes during quarter 1 and 11.27 minutes during quarter 2, compared to 15:23 minutes in the final quarter of last year. Within this average, customers on many of our helplines are experiencing shorter wait times. For example, wait times on our Agents helpline are around 8 minutes, and our customs and international trade helpline – which is playing a vital role in supporting customers as they adapt to new trading arrangements with the EU – is at less than 1 minute.
We cleared an average of 44.6% of customer post and iForms within 15 days in quarter 2, compared to only 35.1% in quarter 1 – a significant improvement although still below where we want to be. Within this average there are many priority areas where we are operating at the same level we were before the pandemic: we have prioritised Tax Credits and Child Benefit changes to ensure that correct and timely payments are made, and we are also clearing eligibility claims for Tax-Free Childcare at a normal level. Digital requests for Unique Taxpayer References are operating to the normal 10-day turnaround and we are processing VAT registrations for online traders (which have seen a 1000% increase over 19 months) at normal levels of 95% within 30 days.
There are some specific factors slowing down the overall return to normal post turnaround. We are working through existing correspondence that progressed more slowly due to the need to prioritise COVID-19-related work – but new post receipts are also rising back to pre-pandemic levels. The different mix of customer demand we have received means we’ve also had to move our teams around more than we would in more stable times. Often, the nature of this work has drawn disproportionately on our more experienced colleagues – for instance, the subject matter of our agent or COVID enquiries often require a high level of knowledge across a range of taxes, as does the training and support of newer team members.
Collecting revenue and managing compliance: April to September 2021
The pandemic had a significant impact on our debt balance – but much of this was due to the choices the government made to support customers by temporarily deferring payments. The debt balance has dropped from its peak as these deferred payments have started to become due.
We know that some customers remain in uncertain financial circumstances, so we’re taking a compassionate and common-sense approach to dealing with tax debts. We’re continuing to support people to pay where they can, including through affordable instalment plans - nine out of ten of which complete successfully.
But we are also using enforcement powers if customers are unwilling to discuss a payment plan, or they ignore our attempts to contact them – and will consider taking insolvency action where appropriate, but only as a last resort.
As a result, we have seen a 39% reduction in our debt balance from the highest level we saw during the pandemic (£72 billion in August 2020). Debt balance had dropped to £57.5 billion by the end of March 2021 and to £44.1 billion by the end of September 2021.
The economic impact of the pandemic has inevitably affected compliance yield (the additional revenue we collect from our compliance activity). It dropped to £30.4 billion in 2020 to 2021, compared to £36.9 billion in the previous year, due to the unprecedented economic circumstances and decisions we took to defer compliance activity and redeploy staff to customer service work on COVID-19 schemes.
Although economic activity is returning to a more normal level, it’s clear the pandemic hasn’t yet gone away and many businesses and individuals are still experiencing financial uncertainty in a changing economy. Much of the economy also remained under COVID-19 restrictions for the early part of this financial year. As a result, we are continuing to see an impact on compliance yield, which remains lower than its usual pre-pandemic level, and comparable to last year at £11.8 billion by the end of quarter 2. We don’t expect to see a return to pre-pandemic levels of compliance yield within this financial year.
Next steps
As the UK builds back better from the pandemic, our core purpose is as important as ever. The country needs a flexible, resilient and responsive tax system. We’ll continue to be on the side of our customers when they’re trying their best to get things right, while tackling the small minority who set out to cheat the system.
The funding we’ve received in the Spending Review 2021 will ensure we can focus on supporting businesses and individuals to adapt to a changing economy, while continuing to bring in vital tax revenue for our public services.
Our plans and investment will be about building a trusted, modern tax and customs department, using the same innovation and capability we demonstrated in our response to the pandemic and UK transition to the way we support our customers moving forward. We’re learning from what we’ve got right during unprecedented circumstances.
Our message to customers remains: you must pay the tax you owe – but if you need help to do so, please get in touch with us so we can support you with a plan based on your financial position.