Mike Clasper (Chairman of HMRC) recently visited ICAEW Council.
Here is a summary of what he said (source ICAEW
hmrc service standards and tax agent strategy
HMRC’s Chairman, Mike
Clasper, and Brian Redford, Deputy Director, Business Customer & Strategy,
attended the October Council meeting to discuss service standards and the
recently published consultation on Tax Agent Strategy.
The decline in service standards is one of the biggest
concerns currently being mentioned by the ICAEW membership. Following a highly
critical report by the Treasury Select Committee published in July 2011, a
meeting was held in September 2011 between HMRC’s senior management and the
professional bodies and various charities to discuss what should be done to
help make improvements. It was chaired by Mike Clasper and following the
meeting a joint statement was published, setting out plans for HMRC to work
with the professions and charities to make improvements. Tax Agents have a
critical role to play and need a strong relationship with HMRC. At the moment
there is a lack of trust that needs to be addressed.
There is understandable concern that promises have been made
in the past to improve service standards but they have not been realised.
However, the joint statement marks a turning point and shows that HMRC has
picked up the challenge issued by the Treasury Select Committee to work with
the profession to make improvements.
The biggest problems highlighted are post and telephone
handling. The challenge for HMRC and the profession is to jointly understand
the nature of the problem, develop solutions to improve the service and find
performance measures that accurately reflect the customer experience.
In the past, there have been different views as to how HMRC
should recognise agents, with some feeling that the focus of attention should
be on the tax payer. HMRC are now clear that strategically the role of the
agent should be recognised in addition to the role played by the customer and
there is a genuine intention on the part of HMRC to improve relationships with
With the launch of HMRC in 2005, there was a loss of confidence
in the organisation from customers as it was felt that it did not have a clear
customer centric focus. The foundations for the merger were solid enough. It
offered one tax authority for business which is a huge enabler for a
customer-centric organisation, a system of dealing with large businesses that
is globally competitive and a vast amount of knowledge about tax payers. However,
the merger did not fully resolve the cultural differences between the two
organisations and needed to deliver efficiency savings at the same time as
facilitating a smooth transition from a local to a national organisation.
Following the merger, HMRC’s strategic objectives included:
Closing the tax gap
Focusing on the customer experience
Providing value for money
Operating with professionalism
In the 2010 spending review, along with all government
departments HMRC was charged with cutting costs by a further 25%, but
reinvestment back into HMRC was agreed with a primary focus on closing the tax
gap and improving compliance.
In order to achieve HMRC’s strategic goals, there has to be
a balance between three key and often conflicting aims:
The tax has to be collected
The customer experience has to be good
HMRC has to be efficient
2010 – A difficult
Mike acknowledged that 2010 was a difficult year and had
said so on the record, but that it had to be seen in context. For HMRC employees,
existing systems and processes were becoming outmoded and as configured were
not able to provide a single view of a PAYE customer on its systems and this
required expensive manual intervention. The system designed to support PAYE was
based on 13 regionally defined databases meaning that some people had several
records, some of which had not been linked and led to bad data quality and
inconsistency. Working with this dated system, people developed ways of getting
the right result without inputting the right data which led to further
problems. HMRC underestimated the problems that would arise in the move to the
new national PAYE system (NPS) and the resources that were needed to tackle
them. These problems were only made worse by the resulting high volume of
telephone calls that taxpayers and agents made to HMRC.
A related problem was the growing backlog for reconciling
PAYE exceptions, which by 2010 had reached 23 million open cases, a problem
that dated back to 1983. It was proving impossible to tackle this backlog with
the existing systems.
The current situation
Mike explained that over the last few months there had been
a considerable turnaround in performance and customers were starting to see the
benefits of the NPS investment and other operational changes. Customer contact
has improved. This year 70% of calls, on average, are answered within 40
seconds which is a massive improvement on the previous year.
Postal response times are the best they have been since the
merger. The average is less than 15 days – calculated from the day the post
arrives at HMRC through to when it is posted on HMRC’s system and a response
sent. However, Mike accepted that this is not translating to the customer
experience and this needs to be addressed. HMRC is also working with its mail
partners, Fujitsu and Royal Mail, to cut delays once correspondence leaves
HRMC. But Mike acknowledged that there
is more to do in improving the customer experience.
Internally, work is being done to improve professionalism
and quality. Training and development is an essential part of this. HMRC is
supporting professionalism through the establishment of ‘The Tax Academy’,
accredited by Manchester
year, some 200 members of staff will commence their training through the
academy for full technical training, although it is acknowledged that a wider
section of the workforce will undertake other training and continuing
professional development. HMRC recognise
some 18,000 members of staff as tax professionals.
Teams have been empowered to improve their own processes
through ‘Pacesetter’ methodology and already an improvement in productivity of
up to 60% has been seen in some areas.
Work is also being done to cut down on the organisation’s
hierarchy. There have been up to 14 approval levels, from frontline staff up to
CEO. By March next year there will be no more than eight. The top four tiers of
the organisation have also been reviewed. 45% of jobs have been competed with a
number filled externally to revitalise the structure and overall numbers
Up to 8,000 members of staff are also moving from processing
to compliance roles in the coming years, which will help to balance the three
requirements to achieving strategic goals.
On the performance challenge, HMRC staff members have
received the training needed to enable them to go out and observe Tax Agents in
their own firms to get a first-hand view of the problems that they are
experiencing. HMRC now needs the profession to volunteer to host their staff
and help improve standards. At the moment, it was proving difficult to recruit
volunteer firms and Mike requested that ICAEW did all they could to promote
this initiative. Since the Council meeting a significant number of ICAEW members and others have stepped forward
and the visits are will commence as planned.
Tax Agent Strategy
Allowing agents to ‘self serve’ through an online system
should improve the process. By enrolling and understanding the business
profiles of tax agents, it will be possible to tailor communication and
Through this system, HMRC will now be able to look at all
interactions with agents. If there are consistent problems, they can then work
with the agents to make improvements, a mutually beneficial process.
HMRC has committed to a big challenge. However, improvements
can only be made with the input of the profession and it is therefore important
that firms come forward to volunteer to host HMRC staff. Council members are
strongly encouraged to do so, and take their opportunity to share their