Tax office closures won't save as much money as the Government thought, spending watchdog says

Costs are significantly higher than had been anticipated

HMRC is moving to bigger regional hubs in a bid to save money (PA)

HMRC’s programme of closing over a hundred tax offices will not save anywhere near as much money as it had expected over the next decade, a watchdog has warned.

The tax authority is moving from 170 offices to 17 regional offices in a bid to cut costs and create “hubs” but a longstanding deal with a private sector contractor is understood to be reducing the planned savings.

The National Audit Office says HMRC now believes only £212 million will be made in efficiency savings by 2026, down from £499 million it had predicted in its November 2015 business case – a cut of 57 per cent.

The 10-year running cost for HMRC’s estate will be 22 per cent higher (£600m) than previously anticipated according to the NAO, with “more than half” of this “due to the higher than anticipated running costs for its new buildings”.

Civil service trade unions, which campaigned against the closures, called for a halt to the programme. PCS general secretary Mark Serwotka said: “With costs rising and the cracks beginning to show, it is now imperative that HMRC halts these plans and allows MPs and the public to have their say.

“Cutting thousands of HMRC staff in recent years has hit the services it provides to the public, yet the department and this Tory government are ploughing ahead with poorly thought through plans that would mean thousands more job cuts.”

​Amyas Morse, head of the National Audit Office, said: “HMRC has improved the handling of its current contract with Mapeley and achieved better outcomes, though significant risks remain.

“Looking ahead, HMRC has acknowledged its original plan for regional centres was unrealistic and is now re-considering the scope and timing of the programme.

“It should step back and consider whether this strategy still best supports its wider business transformation and will deliver the sustainable cost savings it set out to achieve in the long run.”

Liberal Democrat shadow chancellor, Susan Kramer, said HMRC had been “utterly reckless” with its approach to the closures.

“Their actions cost jobs in local HMRC centres and cut businesses and taxpayers off from advice and yet they are now saying the move will cost over £300m over the next decade,” she said.

“These HMRC offices that have closed were the final part of government infrastructure that was in a lot of towns throughout the UK, with them gone, and the jobs, it means another nail in the coffin for many small and rural communities.

“The NAO report is a damming verdict on an organisation that seems as bad at spending money as it is from collecting it from the richest individuals who owe it.”

AN HMRC spokesperson said: “HMRC’s employees are currently spread across 159 offices around the country, many of which are a legacy of the 1960s and 1970s ranging in size from around 6,000 people to fewer than ten.

“Our 13 new Regional Centres are an essential part of our work to modernise HMRC and provide an even better service for our customers, while delivering annual savings to the taxpayer of over £80 million from 2025-26. It also means modern offices for our staff, with the latest technology, better collaboration between teams, local training and wider career opportunities.”