MPs were looking at NAO analysis which showed that call response times plummeted in mid 2015, after HMRC completed a cost cutting exercise which saw staff numbers cut by 42%.  Earlier that year some 5,600 staff left the department, which then went on to recruit 2,400 additional staff after service levels dropped to a point where in October callers on some lines were waiting up to 47 minutes to be answered.

Ruth Owen, HMRC director general for customer service, said that the reduction in staff numbers was down to 55% of those leaving due to ‘natural wastage’, some who were deployed and 2,500 who took voluntary redundancy.

Challenged by MPs to explain why HMRC let go much the same number of workers as it then went on to recruit, Owen agreed that that those who left did not do so because they lacked the necessary skills. However, many did not want to move to the centralised call centres HMRC has been developing.

‘We want to consolidate expertise and skills into fewer sites, so the reason we lost some staff with skills was down to the footprint of our contact centres. Some were also on older contracts, which meant they did not work evenings and weekends, and those are the periods when increasingly our customers want to be able to contact us,’ Owen said.

HMRC has committed to reduce costs 34% by 2020 in the latest spending round, but Owen said future staffing and call centre changes would be phased over five years with more sustainability than before. 

‘There will be no year with reductions of over 9% compared to before, when we reduced by over 20% in one year. There is more contingency, and we have better monitoring systems to spot problems early, like the spike we had in October 2015, which will mean we can predict what will happen and act quickly,’ Owen said.

Caroline Flint, MP for Don Valley, said the NAO report calculated that taxpayers spent four million hours on hold in 2014/15. She pointed out that research findings on the most streamed music for that year found the HMRC’s holding music was ranked as second.

Flint suggested HMRC should consider developing a playlist using hits such as ‘Don’t leave me this way’, ‘Things Can Only Get Better’, ‘Should I Stay Or Should I Go’, with her personal preference being Debbie Harry’s ‘Hanging On The Telephone’.

Flint said that the NAO also calculated that for every £1 poor customer service cost HMRC, the cost to the taxpayer was £4.

Jon Thompson, HMRC’s new chief executive, said he ‘absolutely’ agreed that customer service performance had been below standard in 2014/15 and that HMRC was committed to improvements.

Flint said that while HMRC’s decision to send information to taxpayers about where their tax money was spent, she preferred the example set by the Australian government which sent out letters which began: ‘Dear Mr Citizen, the Australian government thanks you for your tax contribution in 2013/14.’

Owen told the committee that HMRC had seen such letters and was testing the concept now, sending thank you letters to some customers to see what they thought of the approach. The results of the trial are due ‘within weeks’.

Earlier in the session, the PAC asked about whether HMRC would revisit its decision to strike a £130m deal on back tax with Google, now the French authorities have raided the company’s Paris office in connection with an investigation allegedly assessing £1.2bn of VAT and corporation tax payments due.

Edward Troup, HMRC executive chair, said HMRC was in touch with the French authorities but he could not give details on account of client confidentiality. However, he told MPs that if any information not disclosed at the time of the settlement ‘and it is material’, then HMRC would re-open its settlement with Google.

Jennie Granger, HMRC’s director general, enforcement and compliance, in an update on the Panama Papers taskforce, said it now had 100 staff, of whom 70 are from HMRC, looking at around 700 leads. However, she said the data was confined to names and addresses, and did not provide information about underlying offshore structures and money flows.

‘It’s what we call “dirty data”, in that there are lots of pseudonyms, the information is not link and it’s often duplicated. We are currently cross referencing it with data we already have,’ Owen said. 

Granger confirmed to MPs that HMRC will be reporting on what it has found by analysing the Panama Papers database ‘by the end of 2016’.