As a result of closing older, smaller offices and moving staff to regional hubs, HMRC says it will be able to create a more highly skilled workforce, as well as saving £100m a year on property and real estate expenditure by 2025.

The restructure relies on a rapid conversion to digital delivery - online services prioritised over phone calls - of the majority of services and was announced against a backdrop of significant cost cutting across HMRC despite government's attempts to raise ever greater levels of tax and clamp down on aggressive use of tax avoidance, as deemed by government, as well as increasing powers for the tax authority to crack down on tax evasion. 

Commenting on the HMRC reorganisation, Frank Haskew, head of ICAEW tax faculty, said the restructuring will place yet more pressure on an organisation that is not delivering the level of service taxpayers have a right to expect.

‘Service standards are deteriorating with taxpayers having to spend longer and longer on the phone trying to get through or waiting for their letters to be answered,’ Haskew said.

Although the reorganisation makes sense in the longer term, he warned: 'In terms of HMRC's strategy and what it is trying to do, it is trying to give critical mass and long-term benefits.

'But in the shorter term, HMRC is already struggling with dealing with phone calls and post piling up. It is being announced against a backdrop of cuts - it is clearly a worry for taxpayers and our members. It would have been better to conduct the reorganisation from a relative period of strength. You have to ask if this is one reorganisation too far - is HMRC reaching breaking point?'

The reorganisation focuses primarily on closing small regional offices but this will strip out experience at local level, with 13 super hubs replacing the local approach.

Robert Maas, tax consultant at CBW Tax, said: ‘I am staggered that HMRC think that having a large office in Croydon will actually be adequate to provide any sort of a service to the five to six million taxpayers in Greater London.

‘I suspect that the travel budget for HMRC staff to have to visit taxpayers and agents instead of them going to visit HMRC, as has traditionally been the case, is going to create a big dent in the rent saving from closing offices.’

There will also be a major HMRC centre on the former Olympic Park in East London, which is slated for opening by 2019.

Jim Meakin, RSM’s UK head of tax, said: ‘Is this change designed to provide a better service to HMRC’s customers or simply save costs? If it is the former then it is to be welcomed. If it is the latter then there is a risk service standards will slip which will not be good news for anyone who has to contact HMRC when it comes to agreeing tax codes or liabilities.

‘The prospect of waiting even longer for HMRC to answer the phone will be of most concern. If however the move to a hub will help guarantee swifter response times and even perhaps someone who will answer the telephone when it rings and who is trained to deal with my query, then the location of the HMRC hub becomes somewhat irrelevant in this digital age.’

Reorganisation against backdrop of poor performance

A recent report from the Public Accounts Committee (PAC) on HMRC ‘s performance in 2014/15 found that ‘HMRC is still failing to provide an acceptable service to customers and could not tell us when it would be able to do so’. PAC reports that HMRC answered 72.5% of calls during 2014/15 (39% were answered within five minutes) and only 50% per cent in the first six months of 2015 against an unambitious target of 80%.

PAC is concerned that ‘customer service levels are so bad that they are having an adverse impact on the collection of tax revenues’. In an appearance at the Treasury select committee earlier this week, HMRC CEO Lin Homer said the dip in performance earlier in 2015 was partly down to a switch to a new style of telephony system, designed to automatically direct calls to staff who had capacity, admitting that the department had underestimated the initial impact of the transformation in working this required.

 Haskew said: ‘We shouldn’t underestimate the disruption that this restructuring will have on HMRC and the distraction it will cause to its leadership as they seek to implement it. Given the challenge of improving service standards and closing the tax gap, we are concerned that this is the wrong time to be reorganising, closing offices and cutting staff.’

Both CIOT and the Association of Taxation Technicians (ATT) have added their voice to calls for HMRC to ensure its restructuring does  not adversely impact the service that it gives to the public.

Chris Jones, CIOT president, said: ‘Taxpayers and tax professionals alike will be anxious that a public body that is struggling to meet its public-facing service targets has announced that it is about to lose many staff and close its local offices. It is crucial that HMRC retains as many appropriately qualified and experienced staff as it can.

‘It is vital that HMRC closely and continuously monitors what the impact of its restructure is on the quality of its service to the public, over the next ten years and acts promptly to rectify any failure to meet its targets and then adapt its plans.’

Anthony Thomas, chairman of the Low Incomes Tax Reform Group (LITRG)  said that centralisation will not of itself reduce levels of service to taxpayers, but also echoed concerns about the level of disruption involved in closing so many offices  and the moving of staff and functions to new offices which  in some cases will be over 100 miles away.

‘The statement that HMRC is aiming for further staff reductions is worrying though. If this is genuinely because tasks previously carried out manually are being automated – and we acknowledge this is happening to some extent – then that is reasonable, but ministers and the HMRC leadership need to provide reassurance that further cuts in staff numbers will neither make it harder for taxpayers to get responses to enquiries nor damage HMRC’s ability to carry out its compliance role,’ Thomas said.

His views are shared by Frank Nash, tax partner at London firm Blick Rothenberg, who said HMRC’s biggest challenge is to reorganise for change so that its staff are able to train, collaborate and provide a significantly better service all round.

Nash said: ‘Taxpayers who are not represented by professional advisers are left hanging for 30 minutes when calling helplines and when they do get through HMRC’s technical staff are often unreachable beyond the call handler.

‘HMRC needs to invest in more properly trained staff, not less, and the proof of that is in the ever complex legislation which HMRC and taxpayers have to deal with.’

‘If HMRC do not invest in upgrading both its technical resource and making that resource more widely available, this will be a poor deal for both taxpayers and HMRC staff.’

For further details of the HMRC office closures and restructure, read HMRC to shut 137 offices over next five years as part of digital strategy

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