Is poor customer service at the Revenue costing us money?

We need to know whether HMRC's poor customer service in not answering the phone is reducing tax revenues and increasing collection costs.

Ashwin Kumar is the director of Liverpool Economics Ltd.

With more than a quarter of calls not answered in 2011/12, HM Revenue & Customs has a long way to go to meet acceptable standards of customer service.

But while the NAO tell us how poor service is costing customers £136 million a year, they don’t say anything about the likely effect on tax revenues. Surely we need to know whether HMRC not answering the phone is reducing tax revenues and increasing collection costs?

According to today’s report (pdf) from the National Audit Office, HM Revenue & Customs only answered 74% of its calls from the public in 2011/12. And even this figure might be an overestimate because it includes those who hung up during the automated message.

It is somewhat depressing to note the organisation may claim this as a success as they exceeded the distinctly unchallenging target of 58%.

Not only is the Revenue guilty of aiming so very low, but in many important areas of customer service there are no targets at all. For example, there is no target for answering calls within a specified time; no standards for online services; and there are none for resolving queries first time or for measuring customer satisfaction when people actually get to deal with the organisation.

It is welcome the report also says how much these failings are costing members of the public with the Revenue’s continued use of 0845 numbers (horrendously expensive from mobiles) rather than 0345 numbers adding to the problem. The additional time taken for the Revenue to answer the phone costs members of the public £33 million in phone bills and an estimated £103 million in wasted time.

But it is a shame the NAO didn’t look into the likely effect of poor customer service on tax collection rates and collection costs for the Revenue. There is precious little research around, and certainly none I can find by the Revenue itself, that attempts to draw the financial link between bothering to answer the phone to potential taxpayers and the costs and effectiveness of revenue collection.

If punters trying to navigate our notoriously complicated tax system are even slightly less likely to fill out their tax returns correctly or to need more back and forth chasing from Revenue officials, I suspect the £136 million of direct customer costs from poor service would quickly be dwarfed by the costs to the exchequer.

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