Corporate report

HMRC performance update: July to September 2022

Published 3 November 2022

Today (3 November 2022) we have published our performance data for quarter 2 of financial year 2022 to 2023 and monthly performance data for September 2022.

Summary

In 2022 to 2023, we have maintained an improved level of service across most areas of our work, achieving above 80% customer satisfaction with our phone, webchat and digital services. But we realise there is more to be done and we’re focused on continuing to deliver service improvements for our customers.

We’re also working to deliver a trusted, modern tax service. We’re doing this by making the tax system easier, fairer, more agile and resilient, not least through maintaining a sharp focus on introducing new digital services which are simpler for our customers to use.

With the economic outlook uncertain, we’re continuing to do everything we can to help customers with genuine short-term financial difficulties while at the same time taking steps to enforce payment by those who don’t engage with us or refuse to pay.

Delivering a trusted, modern tax and customs service

We want to ensure that the tax and customs system is agile and resilient, so it fits seamlessly with taxpayers’ lives and gives certainty to businesses. This work will play an increasingly important supporting role in creating the right conditions for economic growth.

For individual taxpayers and small businesses, we’re working to make it easy for customers to get things right first time and find the support they need through an improved online service. So far in 2022 to 2023, we’ve achieved more than 80% overall customer satisfaction with our phone, webchat and digital services.

An ever-increasing number of our customers are now using the HMRC app, through which they can view their PAYE tax code and annual tax summary, pay their self-assessment liabilities, manage details for tax credits and Child Benefit and use a tax calculator, all from their smartphones or tablets.

We’ve also introduced easy and consistent payment methods across many services, including pay by bank transfer functionality across more than 40 tax regimes, and a Direct Debit Variable Payment Plan that allows employer PAYE customers to complete a direct debit instruction only once, rather than set up monthly single payments as before.

From December 2022, existing customers will be able to view their claim details and proof of entitlement for Child Benefit online, followed by a new digital claim service for new and existing Child Benefit customers in 2023.

And in the first quarter of 2023, customers will be able to manage their personal details in a single place – starting with the ability to view and change personal details online and have those changes apply to all their HMRC services. We are also delivering new features so users can store their National Insurance details in a chosen device, for example digital wallets, helping reduce calls about lost National Insurance numbers.

For businesses, Making Tax Digital (MTD) is making the filing of tax easier, fairer, less prone to error and closer to real time. By drawing on the expertise of the UK’s software industry, businesses have a choice of MTD compatible software – free or paid for – that they can use to keep digital VAT records and file their returns. More than 1.8 million businesses are already benefitting from the service, and more than 19 million VAT returns have been successfully submitted through MTD-compatible software so far.

We also supported traders to make import declarations on the Customs Declaration Service from 1 October, a key part of the government’s plans for a world-leading fully digitised border that will help UK businesses to trade and to prosper.

Providing direct customer support

For those customers needing to contact us directly, we have:

• turned around 75.8% of customer correspondence within 15 working days in quarter 2 of 2022 to 2023, up from 65.4% in March 2022

• reduced the average waiting time on our phonelines from 14 minutes 49 seconds in March to 14 minutes 2 seconds in quarter 2 of 2022 to 2023

• increased the proportion of callers wanting to speak to an adviser who were able to do so from 71.2% in March to 77.2% in quarter 2 of 2022 to 2023 – although we aim for a service standard of 85%

At times, some of our telephony services and correspondence turnaround times have been affected by high demand and other factors – and we’re sorry that some customers and agents have experienced delays when dealing with us. These factors included extremely high volumes of repayment claims (90% more than usual) and some IT issues as we made vital upgrades to improve system security and resilience in the future.

We’re continuing to focus on delivering service improvements for our customers quarter on quarter. After positive feedback during testing with agents earlier in the year, we’ve expanded access to a new online performance dashboard to all customers so they can check current service levels and processing times.

With the economic outlook uncertain, we’re also doing everything we can to help customers with short-term financial difficulties while at the same time taking steps to enforce payment by those who don’t engage with us or refuse to pay.

We’re playing a major role in providing Help for Households - delivering cost of living payments of up to £650 to eligible tax credits customers. More than 1.1 million eligible tax credit customers received the first payment of £326 in early September, and we’re preparing for the second payment which will be made before the end of November.

Managing debt

During the pandemic, the debt balance rose due to a combination of:

• government legislating to allow customers to defer Self Assessment and VAT payments
• government legislating a moratorium on creditor-led insolvency action, which we extended to individuals
• a reduction in customers’ ability to pay, for example this could be due to restrictions on trading
• our decision to temporarily suspend proactive debt collection activity

By mid-July 2022, we had cleared almost £60 billion of this debt and put a further £1.2 billion into Time to Pay instalment arrangements. This leaves around £12.3 billion still to be cleared. Within this, just £700 million derives from the £40 billion of VAT and Self Assessment deferrals, which is lower than the Office for Budget Responsibility forecast.

But the increased flow of new debts means the debt balance is continuing to run at a higher level than previously. At the end of September 2022, it was around £46.9 billion compared with £19 billion at the end of March 2020. We are improving our understanding of the factors that are causing the debt balance to rise – it is likely that it is a combination of the economic situation, including insolvencies, and changes in customer behaviour, including late filing.

It’s not possible to predict the level of the debt balance with confidence because of uncertainty about the underlying UK economy and other events. At this time, we do not expect the debt balance to reduce below its current level by the end of 2022 to 2023.

Our overall approach to debt remains that we encourage and support customers to pay their tax in full and on time. Where customers are unable to pay on time, we will do everything we can to help those in short-term financial difficulty who engage with us to get out of debt. Where customers don’t engage, refuse to pay, or where businesses have little chance of recovery, we have a responsibility to take prompt enforcement action to collect the tax due.

Protecting tax and payments from error and fraud

Every year, 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. So far this financial year, our overall compliance yield figure is £11.6 billion, broadly in line with the same point last financial year.

We want everyone to pay the tax that is legally due: no less and no more. Our approach is to design the tax system in a way that prevents non-compliance before it can occur, which allows us to direct our resources at the areas of highest risk. So far this year we have successfully referred 152 criminal cases for prosecution, with a 90% success rate at court. We have won 94.5% of our civil litigation cases, including 1,192 this quarter alone.

We accelerated the creation of our Research and Development (R&D) tax relief Anti Abuse Unit in response to an increasing number of irregular claims identified in the Small and Medium Enterprises R&D tax relief scheme which were causing delays in the processing of genuine claims. The Anti Abuse Unit forms part of a package of measures announced by the government to target abuse and improve compliance. From April 2023, all claims will have to: be notified in advance, be made digitally, include more details about the expenditure, be endorsed by a named senior officer of the company and include details of any agent who has advised the company on the claim.

Concerns regarding the National Minimum Wage and the National Living Wage have featured at times in the media this year and HMRC enforces these on behalf of the Department for Business, Energy and Industrial Strategy. We consider 100 per cent of complaints received and in 2021 to 2022, we investigated more than 2,800 businesses, identifying over £16.3 million in wage arrears for more than 120,000 workers and issuing almost 700 penalties amounting to over £13 million. We also undertake a comprehensive education and compliance programme ensuring employers understand their obligations and workers understand their entitlement, and how to complain if they are concerned.

Although the COVID-19 financial support schemes closed last year, we have continued to address instances of error and fraud arising from these schemes. The total amount of money we either blocked from being paid out, or have recovered through our compliance work, is around £1.2 billion so far.

You can read more at Tackling error and fraud in the Covid-19 support schemes.