HMRC continue with modernisation plans

The recent formal announcement that HMRC will be replacing local offices with thirteen large regional centres has served to alert the general public to what tax professionals and accountants have known for some time – that to meet government cost and performance targets, HMRC must cut back on frontline staff and take forward digital interactions with taxpayers and their advisers. The announcement comes at a time when HMRC are also facing criticism over customer service issues. In its report on HMRC’s performance in 2014-15, the House of Commons Public Accounts Committee (PAC) recently 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’. The Committee reported that HMRC only answered 72.5% of calls during 2014-15 (of which only 39% were answered within five minutes) and only 50% 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’.

HMRC currently have 170 offices around the country. Under the modernisation programme, the changes will result in the closure of 137 offices by 2027, to be replaced with thirteen new regional centres. The restructuring of the entire department’s workforce is a huge change, but it is expected to generate estate savings of £100 million a year by 2025.

The first regional centre is expected to open during 2016-2017. Broadly, HMRC employees will be brought together into these centres, which will contain a mixture of operational, tax professional and corporate services. It is expected that 90% of the current 58,000 HMRC employees will either work in a regional centre or see out their career in an HMRC office. Employees were first told about the modernisation plans some eighteen months ago and the subsequent ten-year phasing in period is designed to keep redundancies to a minimum.

A limited number of transitional centres will be kept open for up to twelve years and four specialist centres will also be retained.

The thirteen regional centres will vary in size and in the mix of operational, tax professional and corporate services work that they contain. According to latest information, the smallest will hold 1,200 to 1,300 full-time equivalent members of staff and the largest, operationally-focused centres will hold more than 6,000.

HMRC will have four specialist sites for work that cannot be done elsewhere, notably where HMRC needs to work with its IT suppliers or other government agencies or departments. These will be in Telford, Worthing, Dover and at the Scottish Crime Campus in Gartcosh.

Although HMRC are still searching for specific properties that will meet their criteria for the modernisation programme, it has been confirmed that they will eventually be located in the following cities:

  • North East (Newcastle);
  • North West (Manchester and Liverpool);
  • Yorkshire and the Humber (Leeds);
  • East Midlands (Nottingham);
  • West Midlands (Birmingham);
  • Wales (Cardiff);
  • Northern Ireland (Belfast);
  • Scotland (Glasgow and Edinburgh);
  • South West (Bristol);
  • London, South East and East of England (Stratford and Croydon).

Much modern compliance work can be done from any location but HMRC’s investigators and field force remain a mobile workforce able to cover the entire country as and when they need to make contact face-to-face or at people’s premises. There will also continue to be mobile customer services for vulnerable individuals or those with additional needs.

See the GOV.uk website for further details.

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