MPs say poor HMRC service is to blame for tax chaos

HM Revenue and Customs' service has been branded "unacceptable" by a Treasury Select Committee. A report accuses HMRC of "endemic delays" and warns that "if this continues it may undermine respect for the tax system".

HMRC has had a torrid few years since being set up as a joint department. Chaos ensued as a result of merging the computer systems of the former Inland Revenue and HM Customs & Excise, but blunders have been compounded by poor service and ill-informed staff.

The House of Commons committee said it had "serious concerns" and reported that "there is considerable dissatisfaction among the public and tax professionals with the service provided by the department". It has called for improvements in eight key areas, include better service from contact centres and less reliance on online contact. The report said HMRC's "increasing focus on online communication may exclude those without reliable internet access".

Tax experts lined up to support the committee's recommendations. Anthony Thomas, the president of the Chartered Institute of Taxation, said: "HMRC must act urgently on these recommendations or risk undermining confidence in the tax system still further."

Robin Williamson, of the Low Incomes Tax Reform Group, said: "If HMRC wants to reduce error levels they need to make it easier for people to contact them and get advice that is prompt, accurate and understandable."

HMRC should work with tax charities, the committee said. "This could be key to delivering a better customer service to the unrepresented taxpayer and tax credit claimant," said Mr Williamson.

Frank Haskew, head of the ICAEW Tax Faculty, said HMRC in its current form may not be capable of getting better. "We are not convinced that HMRC has the resources or the capability to deliver on improving service standards."

12 months of chaos

*September 2010: HMRC admits that 6 million people have been charged the wrong tax for 2009-2010 – 1.4 million are sent tax demands totalling £3.8bn.

*February 2011: HMRC is at "breaking point", MPs are told by tax experts, who say badly trained staff give out the wrong advice and lose letters.

*April 2011: It is revealed that HMRC is compounding errors by demanding the wrong amounts from the wrong people.

*July 2011: Almost 5 million people face fresh tax confusion as HMRC begins sending out revised calculations of tax due for 2010-2011. Some 1.2 million taxpayers will pay extra, on average £600.