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Implementation problems ‘inevitable’ in HMRC’s digital transformation, says NAO

HMRC “misjudged” impact of its transformation programme and failed to build in sufficient contingency in its plans, says National Audit Office

HM Revenue and Customs (HMRC) got rid of too many staff members in anticipation of its digital strategy, “leading to a collapse in service quality” for personal taxpayers, according to the National Audit Office (NAO).

The department is working to transform itself into a digital tax administration to maximise tax revenues, become more efficient and transform tax and payments for its customers.

As part of the changes, HMRC cut staff in its personal tax department from 26,000 to 15,000 between 2010/11 and 2014/15.

However, the NAO report said “implementation problems are inevitable”, and the department had misjudged the “cumulative impact of its complex transition and released too many customer service staff before completing the changes to its service”.

“HMRC expected to have reduced demand for contact with customers towards the end of the spending review period. It introduced two services – automated telephony and paperless self-assessment – in 2013/14. But demand for telephone advice did not fall,” the report said.

“HMRC believes it was over-optimistic about the scale of change its staff could take and had not built sufficient contingency into its plans.”

The lack of staff was one of the factors leading to the department providing poor customer service, with the average wait time to speak to an adviser on its tax helpline being 15 minutes in 2015/16.

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In November 2016, the Public Accounts Committee critisised HMRC for “still failing to provide an acceptable service to customers”, with the HMRC only answering 39% of calls in five minutes.

The NAO report said HMRC’s digital plans have the potential to reduce the need for staff and manual processing, but that the department “should consider time and other costs to customers as it evaluated planned savings”.

“The sustainability of cost reductions will depend on the success of new digital services in reducing demand for telephone and postal contact,” the report added.

“HMRC’s plans rest again on introducing digital services and persuading customers to use them. HMRC is learning from its past experience that it needs to allow sufficient capacity for implementing operational and service change.”

No data collected on unsuccessful calls

HMRC was also criticised by the NAO for not having any information about how many unsuccessful callers try to make contact again, and collects no data on whether callers resolve their queries or give up.

“HMRC cannot assume that customers will keep trying to get through,” the report said.

NAO head Amyas Morse said that HMRC’s digital strategy makes sense, but added: “This does not change the fact that they got their timing badly wrong in 2014, letting significant numbers of call handling staff go before their new approach was working reliably.

“This led to a collapse in service quality and forced a rapid expansion of headcount. HMRC needs to move forward carefully and get their strategy back on track while maintaining – and hopefully improving – service standards.”

According to its IT strategy, HMRC wants to transform its IT, re-engineering what it has so the majority of its IT applications run on virtualised infrastructure environments, with as much as possible hosted on commodity cloud services.

In 2015, Computer Weekly reported that HMRC was closing down local offices and creating 13 regional centres, which will all be “equipped with the digital infrastructure and training facilities needed to build a more highly skilled workforce”.

“We have created delivery centres to support the new delivery methodology. These will bring together all the skills required to develop and operate key services. They will be staffed by a combination of HMRC staff and partners, and led by HMRC,” the strategy said. 

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