We can reduce tax office call waiting times to FIVE minutes… but chatbots are essential, says new HMRC contractor

Waiting in a phone queue can be one of the most frustrating elements of modern life.

While the sophistication of artificial intelligence has grown rapidly, some of us still spend hours waiting on the phone.

For anyone trying to get answers about their tax issues, it’s even more frustrating.

A recent report from the National Audit Office (NAO) found that customers spent almost 800 years on hold waiting to speak to HMRC in a single tax period.

It hopes to prompt people to get online, but increasingly complicated tax issues mean more people are left waiting.

It has now signed a contract with digital company Netcompany to improve its customer services division.

We spoke exclusively to Netcompany CEO Andre Rogaczewski about what he thinks are HMRC’s biggest problems and what a fully digital tax office would look like.

‘We can reduce waiting times to 5 minutes’

Andre Rogaczewski has extensive experience in dealing with tax offices throughout Europe.

His company, Netcompany, recently joined Accenture, Capgemini and IBM in securing a contract with HMRC to help digitize its client services division.

The deal couldn’t come at a better time for the tax office, which has been criticized for worsening customer service capabilities.

The average wait time increased from 11:24 minutes to 13:48 minutes between 2019/2020 and 2022/23.

In the first 11 months of 2023/24, customers waited on average 23 minutes on hold. For Rogaczewski and his team, it will be a big task to review the system.

‘It’s difficult to talk about the exact situation at HMRC… (but) if you have digital services that people are not using, as yet, and physical services like call centres, where there are more people calling… you will have issues.

‘Can we go back to a situation where everything is reduced to five minutes?

‘The answer is, of course you can, and isn’t that something we should all aspire to and something that citizens will expect in the future?

“I think it’s doable and possible, but it also requires balancing these things.”

It is this balance that HMRC appears to struggle with. Currently, the system is a hodgepodge of basic online services and long wait times to speak to an advisor.

Although it is understandable. While it may be easy to talk to a chatbot for fairly trivial matters, when it comes to taxes people want to get it right the first time.

Rogaczewski admits that “we have a tendency to want to talk to a physical human being.”

He adds: “It takes time to reach a state of mind or a level of maturity where the citizen feels safe and secure, and the tax authorities have all the necessary online capabilities to respond well.”

He points to his native Denmark as an example, where most citizens feel comfortable using the online service.

‘Of course there are complex cases, but 95 percent feel satisfied with the online service. It took a few years to build both the capabilities and the trust.’

HMRC ‘not alone’ in its challenges

While Denmark might be a success story, Rogaczewski emphasizes that where HMRC is located is not unique.

‘We work with taxes and customs throughout Europe and most countries have the same challenges…

“Most countries have the ambition to move services to a more digital channel and be able to respond in a more personal way.”

He says most tax offices are overwhelmed by the impact of frozen income thresholds, which put more people in higher tax brackets and more people have to interact directly with the tax system.

“I guess most of us feel safer calling and asking about that specific situation.”

The Netcompany boss believes the UK is not behind any other country; “On the contrary, I think the level of ambition is higher.”

‘If you look at what HMRC wants to achieve (and) the idea of ​​an ongoing quarterly feedback rather than an annual feedback is excellent. In Scandinavia we don’t have that.’

Critics of HMRC will say that ambitions and targets are only useful if they are actually met on time.

In 2016, HMRC announced its flagship digitalisation programme, Making Tax Digital, which requires businesses and individuals to keep digital records and report their income quarterly.

Their goal was to maximize tax revenue, save the Government money and improve customer service.

But in the seven years since HMRC launched the scheme, which was £1bn over budget, there has been little improvement.

Last autumn, HMRC chief executive Jim Harra said customer satisfaction with online help desk services fell from 29.4 per cent to 24.7 per cent annually.

Satisfaction with the self-assessment web chat also fell, from 76.2 percent to 70.1 percent annually.

If you’re struggling with the basics, like keeping wait times down, how can customers be sure they’ll receive a good level of service online?

For Rogaczewski, the answer lies in greater digitalization.

‘There is nothing we can’t do, theoretically, digitally. If you have a complex organization and you have access to exact information about the person, logically digital services are as good or even better than any advisor.’

‘It’s not going to happen tomorrow, it will still be a combination of some services being available digitally but hopefully over time, six months to six months, year on year, you will experience that digital services are improving… Rome was not built in a day.’

HMRC will have a long way to go to rebuild trust among its customers, and pushing people towards chatbots could alienate them further.

Rogaczewski believes this is simply a step towards progress: ‘I lived in the ’70s and ’80s and people say it was a great time. It was not.

‘I think (people) tend to forget the progress over 20 or 30 years and you like to think about it week after week or month after month. Life has changed a lot in the last 20 years for most people in Europe.

‘When the Internet arrived it was a great revolution. Did we have Airbnb? Could we order food? It came gradually over 10/15 years. Now we cannot imagine a world without it.

However, ordering food or accommodation is a transactional service. As he admits, tax matters are a little more complicated and providing personalized answers is crucial.

“We need more chatbots”

For Netcompany, the answer is not fewer chatbots but more.

‘Over time, expensive advisers will not be needed in most countries to make sure (people) don’t pay too much.

‘In terms of time, you need to make sure you have enough personal advice and digital capabilities to achieve that balance… It takes time.

‘People are sitting in call centers basically answering questions they’ve been asked before. It may be a pattern recognized by a computer system even better than by humans.

‘It is not the future for Europeans, we simply cannot afford it and people expect definitive, precise and personalized answers.

HMRC says that in the last financial year it received more than 3 million phone calls about things you can do online – resetting a password online, getting a tax code and getting a national insurance number. It is equivalent to almost 500 people working full time in their practices.

It will be Netcompany’s main challenge when it begins working with HMRC in the summer.

Greater digitization will face pushback from taxpayers who want to talk to humans.

‘When people start criticizing and asking why we are going digital so fast…why we don’t hire more people in call centers…I have to say that is definitely not the right way to go.

‘The only way forward for Europe and the UK is to digitalize intelligently and then use humans.

“We need them so they can smile and explain to us, we don’t need people to do the math or look for things that machines are better at.”

Does this mean we could reach a point in 10 years where everything is a chatbot? Andre seems to think so.

‘There will be cases where you still prefer human beings… the personal aspect will never go away, but the facts will be found much more easily.

‘I think the first step in any tax office, and for HMRC as well, is to make sure that 70 to 80 per cent of all citizens can self-service efficiently and that confidence increases.

“I’m sure we have to get there and we will.”