HMRC investment could deliver additional £11.3bn for the Treasury

A new report from the Association of Revenue and Customs (ARC) – the FDA union’s section for HMRC civil servants – calls for large scale investment into compliance and customer service to close the tax gap.

Our new report, Funding the Nation: Optimising HMRC, explores how HMRC can be optimised to better provide for our public services.

It recommends that an investment of £910m would return £11.3bn to the Treasury over the course of a parliament, meaningfully reducing the tax gap.

Key findings:

  • We estimate that the direct cost of HMRC’s current 24 minute average customer hold time and poor postal services is costing UK businesses around £1bn per annum
  • A survey of HMRC staff found that 15% of the workforce lose more than four hours to poor technology each week (10% of their working time)
  • Across the whole department, HMRC staff lose more than 4 million working hours to poor technology each year
  • Using historic yields as a guide, ARC has modelled that if the UK government invested £700m into its compliance regime, with a further £210m into its customer services, it would expect to raise £11.3bn for the next government over a parliament

Responding to the report, FDA General Secretary Dave Penman said:

“The report identifies that HMRC’s workload has changed significantly over the last decade to mirror changes in the wider economy, as well as demographic pressures. The number of taxpayers is increasing and HMRC now manages more complex tax administration, and more frequently, than it has had in previous decades.

“The department’s ability to adapt to this ever increasing workload is a success story but civil servants simply can’t keep on delivering more for less.

“Some of our members reported losing hours of working time every week because of poor technology. This is completely unacceptable in 2024. Civil servants need the tools to do their jobs effectively and efficiently.

“Previous strategic investments in HMRC compliance have successfully increased the tax take but these investments have been ad hoc. To more effectively deliver compliance yield, HMRC needs a clear long-term plan.

“As we approach the upcoming general election, I call on all political parties to take these recommendations on board and pledge to properly invest in HMRC. I believe this report provides a blueprint for a future government, of any colour, for how to deliver better administration in this country.

“A world class tax administration is in the public interest. Only an HMRC that is properly resourced to face new technological challenges, stay ahead of criminals and support taxpayers will deliver the revenues that can support our economic recovery and be able to give the government choices about investing in growth.”