The great HMRC telephone rip-off: Revenue's failure to answer the phone costs taxpayers £136m a year

Taxpayers are facing a bill of £136 million a year because of the inability of Her Majesty’s Revenue and Customs officials to answer the phone, a damning report from the Government’s spending watchdog will reveal tomorrow.

An investigation by National Audit Office found that last year 20 million calls to HMRC’s premium rate 0845 ‘hotlines’ went unanswered.

Those people who did get through had to wait an average of five minutes – with some 6.5 million people left holding for longer than 10 minutes in the first three months of this year alone.

The report concluded that the total cost of delays in answering the phone to taxpayers was £33 million in unnecessary call charges and £103 million in customer time.

It said that if HMRC improved its performance to answer 90 per cent of calls and reduced waiting times, it could save customers around £52 million a year.

Tonight the House of Commons Public Accounts Committee described HMRC’s “sluggish” performance as “unacceptable” and said disproportionately high call charges would hit those least able to pay the hardest.

It said the organisation had been “too poor for too long” and called for a radical change in approach to tackle the problem.

The NAO analysed the performance of HMRC in handling questions, complaints and requests for advice both by post and phone during the last financial year.

It found that despite spending around £900 million each year interacting with tax payers it was still only answering only 75 per cent of calls to its hotline.

The NAO said in important respects it performance had deteriorated. In 2009-10 the average call waiting time has was 107 seconds but is now 282 seconds – while in busy months up to 25 per cent of customers have to wait longer than ten minutes.

Given calls to 0845 numbers can cost up to 45p a minute from mobiles that means some customers are spending £5 before they even get through to an advisor. While HMRC does not directly profit from the income from 0845 number its telephone operator Cable & Wireless does. However tax officials said they did not know how much because they had “no contractual access” to the figure.

The NAO also compared the customer performance of HMRC with the tax systems of other major industrialised countries and found it badly wanting.

Canadian tax authorities answer 80 per cent of calls in 2 minutes compared to the UK where 46 per cent are answered with that time frame. In New Zealand 70 per cent of priority calls were answered in a minute compared to 45 per cent in the UK. Overall HMRC was the worst performer of all seven countries it was assessed against.

The NAO warned that given that HMRC was expected to find reduce staff in its personal tax business by around one third in the next three years it would be hard for it to meet its target of answering 90 per cent of calls by 2015.

Commenting on the report Margaret Hodge, chair of the PAC, described its findings as “unacceptable”.

“When people have no choice but to contact the Revenue to discuss their tax affairs, I find it totally unacceptable that HMRC uses costly 0845 numbers and charges people for the privilege of waiting for the Department to pick up,” she said.

“As the minutes tick by, the profits of HMRC’s phone service provider, Cable & Wireless, rack up as they pocket a proportion of customer call charges.

“HMRC needs to be far more ambitious in its efforts to improve the customer service it currently provides. Targets must better match those of other organisations to greatly reduce the time callers are left hanging on the line and it needs to provide alternatives to 0845 numbers. Customer service at HMRC has been too poor for too long. It needs to put in place a formal strategy for how it is going to make long term service improvements that centre on the needs of customers.”

An HMRC spokesman said that they were “well aware” that in the past they had not delivered the standard of service to which we are committed but added: “We are determined to build on this progress and we have invested £34 million so we can deliver on our improvement targets earlier than planned.

“We want people to be able to access our phone services at the lowest possible cost to them, whilst ensuring value for money to the taxpayer. As part of this commitment we have transferred our Tax Credits Phone Lines, accounting for around 40 per cent of our calls, from 0845 to 0345 numbers.

“We are determined to build on these improvements until we deliver the quality of service to which our customers are entitled to expect.”

Which? executive director Richard Lloyd said their research had shown it can take up to two minutes just to navigate HMRC’s automated system.

“People should not be faced with an expensive phone bill when they are simply trying to sort out their tax returns,” he said.

“HMRC should do more to make it as easy as possible for people to get in touch.”