HMRC Misses Performance Targets

HMRC’s 2024/25 Accounts and Charter Report Highlight Continued Performance Challenges and Delays

His Majesty’s Revenue and Customs (HMRC) has published its annual accounts and charter report for the fiscal year 2024/25, revealing ongoing underperformance characterized by missed key targets and increasing delays in clearing correspondence. While new digital services are promised for taxpayers, the report notably lacks reference to enhancements for tax agents.

On 17 July 2025, HMRC released a suite of documents including its annual report and accounts, which assess its performance throughout 2024/25, alongside an evaluation of compliance with its charter standards. The Institute of Chartered Accountants in England and Wales’ (ICAEW) Tax Faculty has identified several points of particular relevance to taxpayers and tax agents engaged with HMRC.

Planned Digital Enhancements for 2025/26

The annual report outlines aspects of HMRC’s ongoing transformation efforts, including the rollout of new digital services targeted for 2025/26. Key initiatives include:

• Enhancements to the digital self-assessment registration process, simplifying procedures for taxpayers wishing to notify HMRC that they no longer require a self-assessment return.
• Expansion of self-service options within the PAYE digital service, enabling taxpayers to report income changes, verify applicable allowances and deductions, and ensure correct tax payments.
• Introduction of digital tracking services, such as tools allowing child benefit claimants to monitor the status of their claims and payments in real-time.

Despite these planned improvements, the Charter Stakeholder Group expressed concerns that tax agents continue to face significant limitations, noting that agents “cannot access all the information their clients can see, nor perform all the actions available to clients online” (see page 117). The absence of any mention regarding the extension of such services to agents suggests that the digital divide between taxpayers and their agents may widen further.

One notable investment allocated for agents is the £36 million dedicated to modernizing HMRC’s tax adviser registration services, announced during the Autumn Budget 2024. This initiative is anticipated to lay the groundwork for enhanced digital capabilities for tax agents.

HMRC’s Performance Relative to Targets

Alongside the annual report, HMRC provided detailed commentary on its 2024/25 performance metrics. The key performance indicators (KPIs) are summarized as follows:

Of the six targets listed, only compliance yield was successfully met in 2024/25. HMRC has deprioritized average telephone response time and the proportion of callers waiting over ten minutes, though both metrics have improved following a £51 million targeted investment announced in May 2024. Nevertheless, these telephone metrics offer only a limited perspective on overall service quality.

Notably, ICAEW members have reported increasing delays in correspondence handling, particularly regarding tax repayment processing.

Agents’ Experience: Findings from ICAEW and CIOT

In December 2024, ICAEW and the Chartered Institute of Taxation (CIOT) jointly published a report based on a six-week study examining agents’ interactions with HMRC. A key finding was that agents were only able to fully resolve queries in 34% of cases when contact was established. The report put forward ten recommendations aimed at improving HMRC’s customer service provision.

Increasing Digital Engagement

Digital interaction with HMRC is on the rise. The HMRC app added 2.8 million new users during the year, reaching nearly six million unique users. Although use of webchat declined, this was offset by greater engagement with HMRC’s automated digital assistant. Overall, 76.2% of customer interactions in 2024/25 occurred via automated or digital self-service channels, up from 73.2% in the previous year. HMRC aims to achieve a 90% digital interaction rate by 2029/30.

Tax Debt and Payment Arrangements

As of March 2025, total tax debt stood at £44.0 billion, including £6.8 billion managed through time-to-pay arrangements, with £37.2 billion available for collection. Approximately 913,000 taxpayers are utilizing these arrangements. Although tax debt has decreased since the pandemic, it remains at historically elevated levels.

HMRC’s Compliance with Its Charter

HMRC’s charter outlines expected standards of service for taxpayers and agents. The annual report includes research commissioned by HMRC assessing its adherence to the charter (refer to page 32 onwards). The findings reveal a decline in positive ratings among agents, individuals, and small businesses regarding their overall experience with HMRC. For instance, only 33% of agents rated their experience positively in 2024, down from 37% in 2023.

Additionally, a survey conducted by the Charter Stakeholder Group (pages 115 onwards) collected 551 responses, predominantly from agents. Respondents rated HMRC’s performance against key charter standards on a scale of 1 to 10. The three standards reflecting the core ‘health’ of the tax system received the lowest average scores, although all showed improvement compared to 2023:

• Responsiveness: 3.0
• Ease of interaction: 3.3
• Accuracy: 4.1

Furthermore, 82% of respondents expressed the view that HMRC is insufficiently held accountable for its performance against the charter. Concerns included frequent basic errors and a lack of accountability, with poor customer service sometimes preventing agents and taxpayers from resolving such errors, leading to penalties.

Higher scores were noted for other charter standards related to the operational context of HMRC, including recognition of representatives (6.0) and data security (7.0).