The 10% drop in calls to 46.7m in 2017-18 is due to more taxpayers turning to online services, says HMRC. However, digital uptake appears to be sluggish as millions of taxpayers are still having to call the tax authority every year with the number of phone calls only slightly dropping, with HMRC admitting that taxpayer demand has not dropped as much as expected after it introduced various digital channels.

As well as phone answering times increasing 14.6% of individuals waited on the phone for more than 10 minutes before being connected.

The number of full-time equivalent employees dropped by 2,000 to hit 59,332 although staff wages have increased to £1.89bn from £1.87bn in 2016-17. Staff costs stayed constant in 2017-18 at £2.4bn although they are expected to fall to £2.2bn in 2018-19 and £2.0bn in 2019-20.

IT formed 16% of HMRC’s £3.9bn total costs for 2017-18 at £627m with accommodation coming in at £279m (7%).

Over the coming years thousands of HMRC staff will relocate to a small number of locations from the current 137 local offices and centres across the country. Up to 6,000 redundancies are expected due to the geographic relocations.

Moving to regional centres will save more than £300m up to 2025, with annual cost savings of around £90m from 2026, while improving customer service and modernising how HMRC work.

HMRC has signed the leases on 12 out of the 13 regional centres so far.

Tax breakdown

In 2017-18 HMRC generated £605.8bn in revenue a 5.4% increase on the previous year at £574.9bn.

Of this, £30.3bn additional tax was secured through the tackling of tax avoidance and evasion, up 5% on 2016-17. Accelerated payments, which were introduced in 2015, brought in £782m with criminal investigations collecting an extra £2.8bn. HMRC also won 78% of appeals in courts and tribunal protecting £37bn of tax.

Of the £605.8bn, the largest proportion (31%) was generated from income tax at £186bn. This was followed by National Insurance contributions with £130.5bn (21%), VAT at £128.6bn (21%) and corporation tax at £53.3bn (9%).

Income tax and NICs have increased in revenue by 6.8% from last year with corporation tax growing 4.3% and VAT by 3.4%.

Stamp taxes (accounting for 3% of overall revenue) saw the largest growth at 7.8% due to the ongoing increase in house prices across the country.

Capital Gains Tax (CGT), which accounts for 1.3% of revenue, decreased 7.1% due to the reduction in the rates of CGT from 18% to 10% where a person is not a higher rate taxpayer. The higher 28% rate was reduced to 20%.

HMRC annual report and accounts: 2017 to 2018 is here. 

Report by Amy Austin