Thousands of taxpayers get compensation for HMRC delays

HMRC

Complaints to the tax office soared by two-thirds last year as customer service hit an all-time low.

The number of taxpayers complaining to HM Revenue and Customs (HMRC) about long waiting times rose 65pc to nearly 34,000 in 2022-23, up from 20,501 people in the previous year.

Yet of these only 4,742 were paid compensation, according to official figures.

On average, taxpayers who complained about delays were awarded £136 by HMRC – while those who escalated their complaint got £371.

The data suggests HMRC paid £718,000 to taxpayers in 2022/23, up 94c from the £371,000 in 2021/22. HMRC must pay redress in cases where taxpayers have suffered distress because of its poor service.

The tax office may also reimburse costs incurred by a taxpayer although receipts or invoices are required as evidence.

But Graham Boar, of accountancy firm UHY Hacker Young – which obtained the figures in a freedom of information request – said taxpayers often had to fight hard to get compensation.

He said: “Successfully getting meaningful compensation from HMRC for a delay is a very admin-intensive process. Many customers simply give up trying to secure the compensation they deserve.”

Customer service at HMRC has fallen to its worst ever level as the under-resourced department struggles to support a record number of taxpayers.

The latest statistics show that the tax authority left around a third of phone calls unanswered between April 2023 and February this year.

Meanwhile, it failed to respond within 40 days to around two million letters and online forms, out of the total 19 million received.

HMRC has faced a huge rise in enquiries as frozen thresholds have pushed a growing number of people into the tax net.

Meanwhile, a rise in tax fraud has only added to the struggling department’s workload.

Joanne Walker, of the Low Incomes Tax Reform Group, said: “HMRC are pushing more taxpayers towards using digital channels to alleviate the pressure on phonelines and post services.

“However, many of these digital channels are not yet good enough. Many taxpayers who use the digital platforms also find they need to contact HMRC by phone or post, either to seek reassurance that they are doing things right, or because their position is complex and the digital service does not have the answers.

“Alongside this, there has been a very high level of activity by unscrupulous tax refund companies over the past year, leading to a flood of tax refund claims to HMRC, many of which are erroneous. These claims add extra work to the already stretched customer service teams.”

Tax refund companies are unregulated, and some firms will take a large cut of the rebate owed to taxpayers, or fraudulently claim a rebate on someone’s behalf.

In March, HMRC was forced to row back on plans to close its self-assessment helpline for six months of the year after a backlash from trade bodies and MPs.

Gary Ashford, of the Chartered Institute for Taxation, said at the time that the announcement showed HMRC “can’t cope”.

The Government recently committed an extra £51m in funding to help HMRC answer the phones.

Labour has pledged to invest £855m in HMRC should it win the next election, which would go towards closing the tax gap and improving customer service.

An HMRC spokesman said: “We’re making strong progress in improving our customer service and we continue to encourage people to save time by using our highly-rated online services, including our app, where they can.”