HM Revenue and Customs (HMRC) is to close its 281 tax enquiry centres in 2014 and pilot a new support service from June.
The new service will provide mobile, one-to-one support in a range of locations including a person's own home or business. It will also provide expert advisers on the phone, trained to deal with people who need extra support.
HMRC will also make more funding and support available for voluntary sector organisations to help them to deal with customers who turn to them for help.
HMRC has calculated that the new service will save customers almost £12m a year in lost time and travel costs, and will be more than £13m a year cheaper to run than the current enquiry centre network.
Customer demand for the enquiry centres has halved from five million visitors in 2005/06 to fewer than 2.5 million in 2011/12, HMRC said.
Some centres are now open just a day a week as a result of the sharp drop in demand. Of the customers using an enquiry centre in 2012, just 16% needed a face-to-face appointment.
The cost of enquiry centre appointments is also high: the average cost was £152 per appointment last year, and in one centre the cost reached £500 per appointment. In contrast, the average cost of serving a customer by phone is £3 per call, and an online transaction costs just 9p.
The vast majority of customers never use an enquiry centre, as HMRC handles more than 60 million calls a year and millions of online transactions, such as for filing self assessment and VAT returns.
HMRC said it is now answering 90% of all calls, and moving its numbers from 0845 to cheaper 03 alternatives. For those who cannot afford a call, HMRC can also arrange for a call back.
A five-month pilot to test the new services will run in the North East of England from 3 June 2013 to 31 October 2013, and HMRC has launched a nationwide consultation on the new service today.
Six hours for a client report
700,000 transfers in 12 months
104 delegates attended
'Benefit from healthy cash levels'
Could be two months to complete payment