Taxman loses 90% of appeals

Tax Adjudicator says HMRC should do better

Updated: 

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HM Revenue & Customs loses nine out of every ten appeals against tax bills, according to a damning report.

The Tax Adjudicator, the independent body that rules on disputes says that HMRC was forced to give up on £3.9 million it was hoping to collect - and pay out nearly £250,000 for "poor service" and causing "worry and distress".

It made mistakes including issuing incorrect tax codes, failing to follow its own rules, treating complainants badly, giving misleading advice and causing unreasonable delays.

I am again disappointed to see HMRC staff still overlooking the needs of some vulnerable customers," says adjudicator Judy Clements, releasing her office's annual report.

"I have seen a number of cases and situations this year where policy functions have shown limited comprehension of customer focused resolution, have no sense of urgency when making decisions on customer issues, and do not appreciate the impact matters may have on individual customers."

The figures show that her office solved 2,350 disputes over the last year - the highest number ever. Most inquiries related to unexpectedly high bills, with HMRC being found at fault in 93% of cases. This, says Clements, shouldn't be necessary: "If my office can mediate a complaint, then the department should have been able to resolve that complaint without the customer feeling the need to refer the matter to me," she suggests.

The figures are particularly alarming given HMRC's recently-announced plans to help itself from the bank accounts of people it believes to have underpaid tax. It says it expects to target as many as 17,000 people a year.

But as a Commons Treasury report pointed out earlier this year, "This policy is highly dependent on HMRC's ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past."

Taxpayers who believe they're being overcharged should first contact HM Revenue & Customs itself. If the problem's not resolved, they should ask for a formal review, and then have the right to a second one. It's only if all else fails that complainants can resort to the Tax Adjudicator - showing that the number of complaints it's dealt with may only be the tip of the iceberg.

However, Clements says that thanks to a new focus within HMRC on learning from complaints, the number is starting to fall, and is now running at around 70 per month. "I feel my constructive criticism has been listened to and acted upon," she says.

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