Corporate report

HMRC performance update: April to June 2023

Published 3 August 2023

Summary

• HMRC is your tax service – we’re here to support you to get your tax right and make it hard for the dishonest minority to cheat the system

• in 2022 to 2023 we generated £814 billion in tax revenue ^{[footnote 1]} – an increase of 11.3% on last year – money which is spent by government on schools, the NHS, police and other essential services we all rely on

• the vast majority of our customers pay their tax in full and on time. We’ve achieved a long-term reduction in the UK’s tax gap from 7.5% in 2005 to 2006 to 4.8% in 2021 to 2022. It costs us just half a penny to collect every pound of tax revenue

• in 2022 to 2023, our compliance work protected £34 billion of tax revenue that would otherwise have been lost to the Exchequer through error, fraud and other forms of non-compliance

• our customer service levels on phones and post haven’t been where we want them to be. We recognise the real difficulties this has caused some customers and agents. A range of factors, from the impact of higher inflation on our resources to an increase in customers with more complex tax affairs, are making it harder to meet our service standards using the same approaches that may have worked in the past

• so, we’re accelerating changes to how we deliver our services. This means reducing demand for our traditional contact channels and moving an ever-increasing number of our customers onto our digital services so that those who are able to, can manage their tax affairs quickly and easily online and get their tax right from the outset, without needing to contact us

• our digital services are available 24/7, so customers can access them at their convenience and satisfaction with them was 82.7% in the last financial year. We’re continuing to improve them – adding new features all the time, prioritising the most impactful changes that give our customers a better experience and represent the most value for money for the taxpayer

• moving more customers onto our digital services will allow us to focus our adviser-led services, such as phone lines, on providing specialist support for those who have complex circumstances, need extra help, or are unable to engage with us digitally

Delivering a trusted, modern tax and customs service

We want to ensure that the tax and customs administration fits as seamlessly as possible with how people live their lives and run their businesses. This is vital to delivering our vision of a trusted, modern tax and customs service.

To achieve this, we’re becoming an increasingly digital organisation: the vast majority of our customers pay their tax automatically (for example, through PAYE) or deal with their tax and customs affairs through online services, without needing to contact us directly. Around 97% of Self Assessment customers who completed their returns by 31 January 2023 filed online; and our digital personal and business tax accounts and the HMRC app were accessed 198.7 million times in 2022 to 2023, compared with 61.6 million in 2016 to 2017.

We want to keep making it easier for individual taxpayers and small businesses to get things right first time and find the support they need through new and improved online services.

Already, using Making Tax Digital (MTD)-compatible software is the norm for nearly 2 million VAT-registered businesses. Last year, more than 8 million VAT returns were successfully submitted this way. Our peer reviewed evaluation shows that using MTD-compatible software is reducing avoidable errors in tax returns and further studies have shown that 80% of business found the process of filing through MTD compatible software easy.

More than 32,000 families have already benefited from using our new, quicker and easier online Child Benefit claim service. Since its launch on 10 May 2023, anyone with a straightforward claim – for example, those with a child under 6 months – can complete the process fully online and receive their first payment within days rather than weeks.

We now have over 4.4 million customers logging in to the HMRC mobile app and the monthly number of users has doubled in the last year to over one million each month. An ever-increasing number of our customers are using it to view their PAYE tax code and annual tax summary, pay their Self Assessment liabilities and manage details for tax credits and Child Benefit. In April 2023 alone over 1.25 million people made use of this channel to manage their tax affairs, a 69% year-on-year increase in monthly users.

Since 1 October 2022, we’ve also been supporting traders to make import declarations on the new Customs Declaration Service (CDS), after 30 years of using the Customs Handling of Import and Export Freight (CHIEF) system. This change is a key part of the government’s plans to establish a world-leading, fully digitised border that will help UK businesses to trade and prosper. By the end of 2022 to 2023 38.8 million import declarations had been made on CDS. We’re now focused on making sure the UK’s exporters make the move to the new system.

Supporting customers to get tax right

While increasing numbers of customers are using our digital channels to resolve their tax affairs, we recognise that some still need direct support through services like phone or post. Our customer service levels in these areas haven’t been where we want them to be. We recognise the real difficulties this has caused some customers and agents.

Our customer base is growing, with more customers having increasingly complex needs. For example, the number of higher rate taxpayers – who may need more active management in the system – increased by 17% between financial years 2015 to 2016 and 2022 to 2023 and is likely to grow further. We’re also seeing more small business customers getting into tax debt, and the average value of customers’ debts increasing.

In addition, high levels of inflation have put pressure on our available resources. Put simply, it’s getting harder to meet our service standards using the same approaches that may have worked in the past.

In 2022 to 2023, we made considerable progress in improving the proportion of customer correspondence that we turn around within 15 working days, increasing from 45.5% across 2021 to 2022 to 72.7%. Between April and June 2023, this figure had increased to 74%.

The proportion of callers wanting to speak to an adviser who were able to do so averaged 71.1% across 2022 to 2023. The final quarter of 2022 to 2023 saw a dip to 61.9%, with a slight increase to 63.4% between April and June 2023. For the month of June, our performance increased to 70.6%.

In response to these challenges, we’re driving forward vital changes to make us more efficient in serving customers and managing their compliance. The key to doing this is through quicker and easier online services. In 2022 to 2023, we had over 38 million phone contacts and over 16 million items of correspondence where customers require a response – but we know that around two thirds of all Self Assessment calls, for example, could be resolved by customers themselves online.

It’s vital that we keep our adviser-led services, such as phone lines, available for those who really need to speak to us. We aim to do this by enabling many more customers to resolve their issues quickly and easily online, freeing us up to help those who need extra support.


We are taking a number of other actions to make it quicker and easier for customers to resolve issues without having to contact us via phone and post. For example, our digital assistant automatically helps customers to find the information they are looking for and links the customer to an adviser through webchat if it can’t locate the answer. Around 66% of customers who use the assistant don’t need further support.

In January 2023, we trialled sending a direct website link by text to customers who phone us with simple, routine queries, like finding out their reference number or resetting a password. Our online service dashboard and Where’s my reply? tool enable agents and customers respectively to check processing times for queries and requests, reducing the need for progress chasing calls.

Where customers do need to get in touch over the phone, we’ve introduced a new system that uses features such as intelligent voice recognition to improve and simplify the customer experience. Migrating our telephony services onto this new platform has enabled us to streamline the range of helpline numbers that customers use to contact us.

We’re also taking additional steps to manage our customer helplines more efficiently. For example, from 12 June 2023, we piloted a new seasonal model for our Self Assessment helpline, closing it for 3 months during this quieter time of year so that our expert advisers can focus on other priority areas of work, and in turn reduce the need for customers to call looking for progress updates on those issues. Self Assessment support is still available via webchat, online services and increased capacity in our Extra Support Team, so that customers who really do need to speak to us about Self Assessment still can.

Managing debt

While most of our customers pay what they owe at the right time, we are seeing more customers getting into debt in the current challenging economic conditions, and the average value of customers’ debts is increasing. The majority of tax debt is owed by small and medium-sized businesses.

The value of new debt was over 50% higher in 2021 to 2022 compared to the average for the tax years from April 2017 to March 2020. The flow of new debt remained at this elevated level throughout 2022 to 2023. At the end of March 2020, we had £2 billion worth of debt spread across 647,000 customers with Time to Pay arrangements. By the end of March 2023, we had around £5.7 billion spread across 912,000 customers.

Our analysis shows there has been very little change in the proportion of customers filing their tax returns and declaring their liabilities on time, but there has been a reduction in the number of customers paying on time, which is increasing the volume of new debt. This suggests customers remain committed to complying with their tax obligations but are struggling to pay.

The debt balance at the end of June 2023 was £44.5 billion, a reduction from £45.9 billion at the end of March 2023 but higher than the £42.0 billion it stood at in June 2022. Even though we are resolving debts at levels significantly above the average for tax years from April 2017 to March 2020, the volume of new debt exceeds the level at which we are able to resolve it. There are many external factors that influence the debt balance, which makes it difficult to predict, but we forecast it remaining close to these levels in 2023 to 2024.

We do all we can to help those in temporary financial difficulty who contact us. Our flexible Time to Pay arrangements are designed to collect debt in affordable instalments. By the end of 2022 to 2023, we were managing £5.7 billion of debt through time to pay arrangements, supporting 912,000 customers – an increase of around 69,000 customers compared to the end of 2021 to 2022. Around 90% of these complete successfully.

Self Assessment customers with debts up to £30,000 (that they can pay off over 12 months) and employers with PAYE debts up to £15,000 (that they can pay off over 6 months) can set up a Time to Pay arrangement online, without having to call us. This will be extended to VAT debts in the summer of 2023.

For those who can pay but are not doing so, we introduced penalty and interest reform for VAT from January 2023, to encourage payment on time and quicker debt resolution.

Ensuring the right tax gets paid

We want everyone to pay the tax that is legally due, no matter who they are. Our role is to support people who are trying to get it right, encourage people to take proper care and stop the dishonest minority from cheating the system.

Every year, through our compliance work, we collect and protect billions of pounds of tax revenue that would otherwise have been lost to the Exchequer through error, fraud or other forms of non-compliance. We call this ‘compliance yield’ and our activity to protect this money is a crucial part of ensuring everyone pays the right amount of tax. In 2022 to 2023, we delivered £34 billion of compliance yield. The National Audit Office recognised, in a report published in December 2022, that our compliance work offers good value for money for the UK taxpayer.

To ensure everyone pays the right tax, we have a well-established compliance strategy with 3 elements: preventing non-compliance, promoting good compliance, and being robust in our response to those who bend or break the rules. The changes we’re making to modernise our services are vital to this strategy. They aren’t just about improving customer experience, they also help to ensure customers pay the right tax at the outset, rather than fixing problems after they happen.

For example, peer-reviewed published research has shown the move to businesses submitting their VAT returns using Making Tax Digital-compatible software from April 2022, is helping to reduce opportunities for calculation and transposition errors, thereby reducing the tax gap. The Office for Budget Responsibility (OBR) have certified our latest assessment that this will lead to additional tax revenue of £2.6 billion over the current scorecard period to financial year 2027 to 2028. Separate social research on customer experience has also demonstrated that most businesses have experienced at least one benefit from Making Tax Digital, most commonly making preparing and submitting their VAT return faster and feeling more confident they are getting their tax right.

More broadly, we’re also using more targeted campaigns, prompts and nudges, such as highlighting to customers if they enter data that doesn’t align with what we expect. All of this activity is vital to maintaining a low tax gap, while achieving ever greater cost efficiency. And we’re building on what is already a strong record: it costs us just half a penny (0.51p) to collect each pound of tax revenue. Each year, around 95% of the tax that’s due gets paid, and the vast majority of our customers pay in full and on time.

Of course, protecting taxpayers from those who seek to harm the system will always remain a vital part of being a trusted tax authority. In 2022 to 2023:

• the average value of our criminal cases increased from £2.3 million in 2016-17 to £6.2 million
• our serious fraud investigators initiated 396 new criminal cases and more than 12,500 civil investigations into suspected fraud
• 240 prosecutions were brought as a result of HMRC criminal investigations, securing 218 convictions with a success rate of 91% in court
• we recovered £165 million in criminal assets using UK proceeds of crime legislation

Using new powers, we named 27 tax avoidance scheme promoters and 5 directors during 2022-23, alongside details of the 31 tax avoidance schemes they were promoting.

We’ve also seen a downward trend in the number of HMRC related telephone scams, with 99,000 fewer scams reported to us in 2022 to 2023 than in 2021 to 2022.

1. The figure of £814 billion in total tax revenues generated is calculated on the basis of accruals, while a lower figure of £786.6 billion quoted by the Office for Budget Responsibility and the Office for National Statistics is based on cash receipts, consistent with our annual tax receipts and National Insurance Contributions bulletin. The accrual figure reflects tax revenues that are receivable or will become receivable based primarily on taxable activities by individuals and businesses throughout the 2022-23 financial year, while the cash figure purely reflects actual receipts from taxpayers during that period. Some of the accrued revenues will of course have been received as cash during the financial year itself, most notably in the case of VAT and income tax and National Insurance contributions via PAYE. ↩