Corporate report

HMRC performance update: October to December 2023

Updated 25 March 2024

Summary

HMRC is your tax service – we’re focused on delivering a trusted, modern tax and customs service that makes it easier to pay tax and harder to get it wrong.

In financial year 2022 to 2023 we collected £788.8 billion – an increase of 10.2% on the previous year – money which is spent by the government on schools, the NHS, police and other essential services we all rely on.

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. This means we bring in more than 95% of the tax that is due. It costs us just half a penny to collect every pound of tax revenue.

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

We’re developing and enhancing our digital services to give customers quicker and easier ways to deal with their tax and customs affairs and reduce the cost to the public purse of administering the system.

Delivering customer services

We’re focused on delivering a modern, efficient service that makes it easier to pay tax and harder to get it wrong. That means improving guidance and enhancing and expanding our digital services – online via GOV.UK and through the HMRC app – to give customers the quick and easy ways to manage their tax affairs that they expect.

Millions of our customers pay their tax automatically (for example, through PAYE) and those who do need to take action to keep their tax affairs in order are increasingly doing so online via GOV.UK and in the HMRC App. Between January and December 2023 there were 80 million logins to the HMRC App by 3.3 million unique users, a login growth rate of over 70% when compared with the previous 12 months. And so far in 2023 to 2024, satisfaction with our digital services has consistently been above 80%.

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 find the answer. Approximately two-thirds of customers who use the assistant don’t contact us for further support. Digital assistant interactions have increased from 1.9 million in 2022 to 2023 to 3.5 million so far in 2023 to 2024 (up to end of December 2023).

For customers who still need to contact us by phone or post – like those who struggle to go online for example, or those who have complex queries that require intervention by an HMRC officer – we recognise that service levels remain below our service standards and that this has caused real difficulties for some customers and agents.

The things affecting our ability to meet service standards on telephony and post include growth in the number of customers in the tax system, an increase in the proportion of customers with complex tax affairs.

In 2022 to 2023 we made a significant improvement in the proportion of customer correspondence that we turn around within 15 working days, increasing to 72.7% from 45.5% in 2021 to 2022. As at the end of December 2023, the figure for this financial year to date was 74.8%. The proportion of callers wanting to speak to an adviser who were able to do so averaged at 71.4% between October and December 2023.

But we know that there is more scope for our customers to help themselves by self-serving online. More than 3 million of the phone calls we received in 2022 to 2023 were about just 3 things that can easily be done online: resetting a password, getting your PAYE tax code, and finding your National Insurance number. It takes the equivalent of 500 advisers to answer those calls.

It means those people who really need to speak to an HMRC adviser – including those with complex queries, the digitally excluded and the particularly vulnerable – can struggle to get the help they need.

The only way we can meet those service levels for customers who really need to speak to us, is by further improving and expanding our digital and online services and continuing to direct even more people to use them.

In order to deliver the service standards our customers expect with the resources we have, our aim is to reduce the volume of contact through phone and post and boost the number of customers self-serving online at GOV.UK or in the HMRC app, without needing to contact us.

This plan will save public money by reducing the costs of administering the tax system and enable us to focus our advisers on those customers who need extra help. It will also meet the demand from our customers to be able to self-serve online at a time that is convenient for them. So, it’s the right thing to do for our customers and for the public purse.

We will continue to deliver a service to customers who are unable to access our services online, or who have complex tax affairs that cannot easily be dealt with through digital and online services. Although in time, we expect this to be a much smaller group of people.

Supporting trade

The government’s vision is to have the world’s most effective border by 2025 and HMRC has an essential role to play in ensuring the customs system supports the smooth flow of trade, helping to deliver economic growth.

We continue to play a key role in supporting Cabinet Office to develop a new Border Target Operating Model (BTOM), including toward a fully operational Single Trade Window (STW) – a new digital gateway that will see greater functionality improving the user experience over time. Eventually this will enable traders to meet their import, export and transit obligations in one place, and help us to improve how we assess risk at the border.

The BTOM sets out a new model for importing goods into Great Britain from countries inside and outside the EU, including a new approach to safety and security controls which will apply to all imports and some outbound movements. The BTOM also sets out how the controls will be delivered through simplification and digitisation, and how the Single Trade Window will help to deliver many of these changes.

In his Spring Budget 2023, the Chancellor announced measures to simplify customs import and export processes, taking advantage of the new freedoms that we have as a result of leaving the EU, while upholding the UK’s high regulatory and security standards at the border. Digital innovation is integral to this, and to the other work we’re doing to help deliver the world’s most effective border, which is vital to the government’s growth priorities.

After 30 years of traders using our Customs Handling of Import and Export Freight (CHIEF) system to make declarations, importers now submit all their import declarations through the Customs Declaration Service (CDS). We’re now focused on helping the UK’s exporters make the move to the new system by 30 March 2024.

The migration to CDS is an important step towards a more efficient, digital and customer focused customs system. We’re supporting businesses through these changes, so they can continue to successfully compete on the global stage, while this process is also helping to facilitate the introduction of new technologies for trade.

We are also continuing to support traders moving goods between Great Britain and Northern Ireland through the Windsor Framework. We’ve delivered the new UK Internal Market Scheme, with 7,000 traders authorised before it became fully operational. Once the Windsor Framework is fully delivered in September, traders will have access to the UK Internal Market System, freeing goods that stay in the UK from unnecessary paperwork, checks, and duties. We’ve also extended the free-to-use Trader Support Service until December.

We completed delivery of the Windsor Framework phase 1 on 30 September 2023, enabling traders to claim back or avoid paying duties on eligible goods movements between Great Britain and Northern Ireland. Phase 2 will see us deliver a new solution for moving post and parcels, along with other benefits by September 2024.

Ensuring the right tax gets paid

We want everyone to pay the tax that is legally due, no matter who they are. The vast majority of customers pay their tax in full and on time. Together with HMRC’s compliance activity, this means around 95% of the tax due is paid.

In 2022 to 2023, we secured £34 billion of compliance yield – that’s tax revenue that would otherwise have been lost to the Exchequer through error, fraud or other forms of non-compliance.

We want to make paying the right tax as simple as possible, while taking the necessary action to protect society from harm and ensure a level playing field for individuals and businesses.

Our well-established approach is based on doing 3 things:

1. First, making it easier for customers to get things right and harder to get them wrong by improving our policies, services and systems.
2. Then, promoting good compliance by educating and supporting our customers in their tax affairs.
3. And finally, stepping in to help customers get their tax affairs in order and ensure the tax system is operating fairly.

The most effective way we can ensure the right tax is paid and support customers is through the overall design of the tax system – improving processes to remove opportunities for error and fraud, and taking preventative action to educate and help customers get their taxes right first time.

This means simplifying policies and processes, providing clear guidance, building user-friendly digital interfaces and prompting customers to file correctly. It includes pre-populating customers’ forms with information that we already hold, such as any data received from third parties – like we do with bank data on interest earned – and exploring new ways to improve compliance for the future.

The changes we’re making to modernise our services are vital to this strategy. By the end of 2024 to 2025, we want 25% of our compliance yield to come from helping customers to pay the right tax at the outset, rather than fixing problems after they happen.

Making Tax Digital (MTD) for example, already helps businesses to keep on top of their VAT affairs, saving them time and helping to reduce the element of the tax gap caused by error, and now we’re extending it to income tax for businesses and landlords.

We’re also using targeted campaigns and digital prompts on both our own and stakeholders’ systems, highlighting to customers if they enter data that doesn’t align with what we expect. HMRC recently built a ‘nudge’ message for customers into a commercial software product to encourage the right classification of taxable grants received by businesses. This simple change helped 3,400 businesses to correct their tax returns at the point of submission – with over £3 million additional related tax paid as a result.

While we aim to address risks before anything has the chance to go wrong, we also carry out compliance checks to make sure people are paying the right tax. In 2022 to 2023, we opened 299,000 new compliance checks and completed 280,000, helping get taxpayers back on track. We recognise that undergoing an HMRC enquiry can be stressful. Our aim is to support people to get their tax affairs resolved, treating them fairly and taking account of individual circumstances – delivering against our Charter commitments and published Compliance Professional Standards.

We are committed to identifying and supporting customers who need extra help meeting their tax liabilities, where their health or other circumstances make managing their tax affairs more difficult for them. We have made significant improvements to this service over the last few years.