An influential group of MPs has slammed poor service at HM Revenue and Customs (HMRC), highlighting long delays for taxpayers looking for help and errors by the government department.
They say considerable dissatisfaction exists among the public and tax professionals with the service provided by to taxpayers and benefit claimants.
In a report published today, the Commons Treasury Committee concluded there was a "serious risk" that if communicating with the HMRC became too time-consuming, difficult and expensive, "respect for the tax system, and with it voluntary compliance, may be undermined".
The report said three issues of concern in particular stood out, including access to advice over the telephone, delays in responding to post, plus the need for off-line alternatives to internet-based filing and guidance for those without access.
The committee noted the "flawed implementation" of the PAYE system had done "significant damage" to the public perception of HMRC and the general tax system.
Millions of people have either overpaid or underpaid tax as a result of HMRC blunders over the past few years.
The committee acknowledged HMRC operated "under significant pressures" such as implementing increasingly complex tax legislation, restructuring, plus continuing resource reductions.
It said: "HMRC collects revenue for the Government of more than 100 times the amount it costs to run.
"Given the fiscal position, it would make little sense for the department to be cut back further if resource reductions in addition to those plans already agreed would have the effect of reducing receipts, displacing disproportionate costs on to the wider economy or further eroding public confidence in the tax system."
Only this week, MoneySavingExpert.com revealed 500,000 people were given extra time to pay a tax instalment due tomorrow because HMRC ran out of paper so couldn't send reminders. Meanwhile, many trying to renew their tax credits, also due tomorrow, face huge delays on the phone.
The committee made a series of recommendations including rapidly improving its phone service, particularly in relation to complex queries, and looking into providing alternatives to expensive 0845 numbers.
It also advocated drawing up minimum-service standards for dealing with post "in a timely and accurate fashion", plus considering cost-effective ways of providing more face-to-face advice and offering alternatives to online communication.
Emma Boon, campaign director at the TaxPayers' Alliance, says: "This is yet another example of HMRC's ineptitude and again raises questions over whether it is fit for purpose.
"After taxpayers have put up with mistakes, the least HMRC could do is have the decency to respond to letters in a timely fashion so that taxpayers don't worry unnecessarily.
"We cannot go on with the system in total disarray like this, it's failing taxpayers. It's insulting to ask taxpayers to keep paying more in tax when they can't seem to collect much of what they already ask us for."
An HMRC spokesman said: "We know we have a lot more to do to improve our services to customers. But HMRC is in a much stronger position now than in 2010 and plans to go further.
"We have recruited 1000 additional contact centre advisers to manage exceptionally busy periods this year. We have improved the way we deal with post, for example rapidly reducing turnaround times on PAYE and SA post.
"Moving services online has been a success, making it easier and quicker for most customers to access HMRC services. We recognise that not everybody can access these online services but we are committed to delivering the same quality of service to all customers.
"We welcome the Committee's report, and particularly its recognition of the dedication and professionalism of our staff."