FOI release

Section 15 - Customer service

Published 23 April 2020

Customer Service

There is no doubt that we could have done, and can still do more, to improve communication with our customers and that in too many cases we opened an enquiry and then failed to communicate sufficiently with the customer; sometimes for many years.

Until 2014 our approach to communicating with customers in avoidance cases was to work a lead case and focus on active correspondence with the promoter/agent who would agree to keep their clients informed of progress – we would often formalise this arrangement by way of a ‘representative sample agreement’ (RSA). This had the unintended consequence of allowing some promoters to block some of HMRC’s communication efforts and give an ‘all is well’ message to clients when our communications to the promoter/agent made clear that we strongly believed otherwise. We have, to a large extent, moved away from this approach since 2014 and are more actively communicating with avoidance scheme users directly. Where we know about, and choose to investigate a scheme, we now seek to obtain information from each user we identify, not just a representative sample.

Avoidance schemes structured as syndicates where confidentiality prevents HMRC from sharing information relating to the syndicate with investors; and partnerships, where in common with the wider HMRC approach to enquiries, communication in connection with the partnership enquiry is routed through the nominated partner, pose a particular challenge. We plan to revisit our communications approach with these schemes too, with a view to applying our broader approach of more direct communication.

However, there will still be customers currently who have had “one-to-many” letters, but not had regular bespoke communications from us. This is likely to run into 1,000s given the challenges of managing over 110,000 open enquiries.

Part of our strategic approach to bringing customers’ enquiries to earlier conclusion, particularly those who have been in a long standing avoidance dispute with us, is to write to them setting out where we have won in court the substantive argument that applies to the scheme they are a member of, the formal powers available to us, and the ease with which customers can settle with us. Our new approach, which we plan to gear up during 2020 to 2021, is intended to encourage customers to engage and settle their dispute, which invariably saves the customer (and HMRC) from incurring further costs pursuing their dispute, which has little chance of success, through the courts (HMRC wins over 90% of disputes that customers take to court/ tribunal).

More broadly, our strategic approach to tackling customers who are using new avoidance schemes involves challenging scheme use in near real time by engaging with customers early to highlight the avoidance risk they present, and implications, before loans build up. An example of this strategy in action includes an approach we are currently piloting where, having identified a new avoidance scheme being set up, we’re writing to each of the recorded scheme users as soon as possible (i.e. as the users first appear on an employer’s monthly RTI return and before they have to file any self-assessment return) and informing them of our view that they’re engaged in a tax avoidance scheme. We explain to them that HMRC are on hand to help the individual extricate themselves from the arrangement. This approach seeks to avoid the delay that is inherent in opening formal enquiries (where we first need to await the submission of a tax return, before we can open an enquiry and intervene). We are testing this approach and the feedback from this pilot will inform how we design this process for engaging with customers early, going forwards.

It is important to mention briefly our approach to customers who need additional support here too. We have already shared with the Review team the support we offer to these customers and our current Additional Customer Support infrastructure. We recognise that settling DR liabilities and more recently, facing the loan charge, was likely to be very stressful for some customers. We have been providing a bespoke customer-focussed service for customers in this position for several years.

In 2014 we set up the Contractor Loans (CL) Settlement Helpline. The remit of this dedicated helpline was expanded to deal with all DR scheme users’ affairs and relaunched in November 2017, with call handlers increased fourfold (to 40 handlers) in Autumn 2018.

By the end of 2018, all front-line staff (at that time) dealing with these cases had had our vulnerable customer training. We had also set up a specific team looking after vulnerable customers to support them in resolving their avoidance dispute.

In Spring 2019 we announced the extension of HMRC’s successful Needs Enhanced Support service to customers undergoing compliance checks, starting with HMRC’s Counter Avoidance directorate. This became the Additional Customer Support programme.

In June 2019 we launched the Loan Charge Helpline (separate to the CL Settlement Helpline), which capitalises on our existing call centre infrastructure and now brings in further call handlers, able to triage routine enquires supported by a formal escalation route for more detailed questions.

In terms of improving our correspondence to customers involved in disguised remuneration, we committed in March 2019 to drawing on the expertise of representative bodies in supporting customers when planning a one-to-many communications campaign. We put this into action immediately, running 2 draft customer letters past the Institute of Chartered Accountants in England and Wales (ICAEW) and Chartered Institute of Taxation (CIOT) over summer 2019. HMRC’s Customer Compliance Group is undertaking a wider review of our current approach to communicating to customers when we open enquiries etc, with a view to making our communication more helpful, particularly for those customers that are un-represented.

Regular contact with customers

We recognise long, unexplained periods without direct communication from HMRC was a significant feature of our historic approach to communicating with avoidance scheme users, for the reasons set out above – too many customers with an open enquiry did not hear from HMRC for a significant period of time, often years after the enquiry was opened.

In line with our revised strategic approach to legacy cases, we have already started the process of re-engaging with scheme users, to encourage them to settle. DR scheme users would have heard from us regularly, particularly over the last 2 years as we’ve sought to correspond with them direct, and encourage them to settle under the published settlement terms.

There have been at least two one-to-many campaigns (where HMRC has issued a generic letter to a large volume of scheme users to deliver a standard message) during this time, interspersed with various scheme specific correspondence (on a more bespoke basis, led by the scheme lead investigator). In addition, we have of course been writing to scheme users who expressed an interest in settling their DR scheme use under the November 2017 published terms.

We plan to keep up this level of engagement with DR scheme users going forwards. We have, however, yet to fully implement more regular contact across all avoidance scheme users and whilst there are plans in place, we are yet to fully operationalise our strategy for addressing legacy avoidance cases. Our internal guidance is clear that in one-to-many communication campaigns, providing regular updates is mandatory although this may not always be via letter. For bespoke, scheme based correspondence, the regularity of our communications will be tailored to the circumstances of the scheme, but correspondence in some form to scheme users at least every 6 to 12 months is our aspiration.

Counter Avoidance has set a new vision for our work that prioritises tackling promoters and dissuading customers from getting into avoidance in the first place. In addition to existing powers, part of dissuading customers involves the approach to direct contact. Counter-Avoidance is also developing a new strategic approach to resolving the legacy of over 110,000 customers with open enquiries including the remaining customers involved in disguised remuneration. We will shortly be setting out what we can do within existing resources, and what we could do with more, and will feed that into wider compliance group work on supporting customers, business planning for 2020 to 2021 and any future spending review. However, it is clear that resolving the existing open enquiries while policing the loan charge and addressing further cases that result from the review’s recommendations will require additional resource and take time (our high level estimate is that resolving all open enquiries will take at least 10 years and probably longer).

Information from advisers

It has been suggested that advisers were able to provide misleading advice/ information, and were left, unregulated, to communicate messages to users without HMRC communications. Two thirds of the advisory community are members of a professional body and are therefore, subject to a degree of regulation.

HMRC has endorsed the code of practice for which these professional bodies are responsible for regulating. Some unregulated tax advisors provide advice on avoidance that we consider to be un-professional. It is difficult for HMRC to determine the extent to which any advice has been positively misleading. These advisors are unlikely now to be members of any professional body, such as the ICAEW or CIOT.

Since Counter Avoidance was set up in 2013 to 2014, HMRC has been actively engaging with professional representative bodies (including the accountancy and legal professions), encouraging them to carry our messages on the dangers of tax avoidance. Notable successes include a suite of products we’ve produced for all of the accounting bodies, including webinars, simple guides, case studies and draft articles for publication. We have a detailed plan for the delivery of further products, working in partnership with the professional bodies.

We are also tackling those advisors who are not members of professional bodies. We use the HMRC Standard for Agents (available on GOV.UK) as a basis for such checks. By way of an example, of 6 face to face meetings held with agents acting in respect of one avoidance scheme promoter (representing around 100 scheme users) all have agreed that:

• their work falls short of what is acceptable
• they will no longer submit accounts or correspondence to HMRC in respect of such avoidance users, other than those who wish to now settle.

We are looking to accelerate and extend this approach of engaging directly with agents of specific scheme promoters to flag where they have fallen short of the standard of professionalism expected, with a view persuading them of the benefits of taking users out of avoidance.

Over the last 5 years we have also collaborated with other intermediaries to cascade our message. For example, in 2014 former Director, Counter Avoidance, appeared alongside Gordon Taylor of the Professional Footballers Association in an online video warning footballers to steer clear of avoidance, and we have authored several articles in their trade magazine since then. Other more sectoral approaches include an article in Nursing Times (spring 2019).

HMRC co-ordination

HMRC is working towards putting in place a master customer record for all customers as part of wider digital transformation. This is a major and complex undertaking that will require significant time and investment. Until such time that there is a single customer record covering both all aspects of a customer’s tax position and all their contacts with HMRC, there will always be a risk that interaction with HMRC will be disjointed because the IT systems used for compliance, debt management and customer contact centres are not yet linked up. We acknowledge that this can result in poor customer experience.

Where customers are recorded as needing additional support (ACS), a more bespoke, coordinated approach to their tax affairs and interaction with HMRC is taken. But this level of service is not sustainable across the avoidance scheme population as a whole.

Counter Avoidance are working to improve the coordination of communications from across the directorate (be that GAAR, APN, FN, or scheme based letters as far as possible within the constraints of existing systems). While legislative time limits can require specific formal notices to be issued at different times, we recognise that there is an opportunity to better set out how any legal notice fits into the context of our wider planned engagement with the customer. But none of that will have a material impact on the coordination of correspondence issued from other parts of the organisation.

Planning for new IT systems that can introduce a master customer record is being considered as part of HMRC’s input to the next spending review.

Additional Customer Support

Counter Avoidance introduced the Additional Customer Support (ACS) programme to meet the needs of its customers who needed additional support while we work with them to resolve their tax disputes. The ACS programme is available to all Counter Avoidance customers and is not targeted specifically at those involved in DR schemes or who need to pay the loan charge.

Where we become aware that a customer is experiencing difficulties, we identify the individual as needing additional support through a process of triage on a case-by-case basis. This might identify someone as needing additional support for a range of reasons including physical or mental health, family issues or stress, including those very anxious about how they will pay the tax due. It is not always easy for us to identify someone requiring additional support.

We identify those cases with the most acute needs as our highest priority and provide the most support. This could be, for example, where we think there might be a risk of suicide, harm to others or customers suffering from a terminal illness. Where appropriate, we direct people to organisations like Samaritans and Mind.

Ability to pay is not of itself an indicator that a customer needs additional support. However, financial concerns may of course contribute to anxiety and stress and the requirement for additional support. HMRC considers the support needed to work to the resolution of a customer’s affairs on a case-by-case basis.

A network of customer support specialists across Counter Avoidance have been appointed to support caseworkers when they have identified that a customer may need additional support to settle their tax affairs. They provide guidance in terms of customer handling and level of support required.

All customer front line staff in Counter Avoidance are required to carry out training to enable them to identify customers who need extra help.

Enhanced face-to-face training is underway for customer support specialists and managers. This will provide more colleagues with the necessary skills to carry out their responsibilities and support customer facing staff, and to bring consistency across Counter Avoidance.

We recognise that a proportion of our customers will need additional support for a variety of reasons in order to meet their obligations. Where a customer approaches us, or is identified, as needing extra support, we will work with them to enable them to fulfil their obligations while adjusting our approach, process and decision making to mitigate the impact of HMRC activity on them.

Go to section 16: Further information on measures introduced to address stakeholder concerns.