12 Sep 2012 | 04:52 pm | 3 min. read
3 out of 5 complaints from taxpayers to HMRC in 2010-11 upheld… by HMRC
Well over half of complaints by UK taxpayers to HM Revenue & Customs (HMRC) in 2010-11 (latest available year) resulted in HMRC admitting to mistakes, according to Pinsent Masons, the international law firm.
Complaints received by HMRC’s internal complaints system hit 58,110 in 2010-11 (year end 31 March). Of complaints decided in that year, HMRC itself upheld the complaint in 33,284 cases – 57% of total cases*.
George Gillham, Legal Director at Pinsent Masons, says: “The number of cases where HMRC has admitted it got something wrong is remarkable. It suggests that if you make a complaint to HMRC, they’ll probably decide you're right, at least in part.”
“Taxpayers don’t always use the opportunities they have to challenge HMRC. The tribunal process is open to those who want to dispute the amount of tax they owe to HMRC, but it’s important that people remember they can complain directly to HMRC if they feel unfairly treated or if they feel HMRC errors have forced them to incur financial costs.”
“Many complaints result in HMRC writing a tax liability off or offering compensation – and quite a lot of money can be at stake.”
Pinsent Masons says that complaints are made by individuals or small businesses and are likely to be about unreasonable delays, mistakes, and poor treatment by HMRC staff. In some cases, mistakes or delays by HMRC will have led to an unexpected tax charge that may be written off after a complaint. Other disputes about tax due to HMRC are handled by the tribunal system.
George Gillham explains: “HMRC is prone to making errors. It’s unfortunate, but it’s true. This is partly down to budget cuts leading to de-skilling on the frontline, but it’s also to do with the massively increased complexity of the tax system over the past fifteen years.”
George Gillham says that another source of complaints is the approach of HMRC’s debt collection agency, the Debt Management Office.
“HMRC’s Debt Management Office can take a very heavy-handed approach, which can be upsetting for a lot of the people that the office targets. DMO aren't there to negotiate, so even if HMRC has made a mistake, the DMO won’t back off until it has what it’s been asked to retrieve or been informed of a mistake by HMRC. It’s a very unpleasant and distressing experience.”
“What the data can’t tell us is the effect that HMRC’s increasing use of private sector contractors for debt collection has had on complaints. But anecdotal evidence suggests taxpayers’ experiences with these contractors are even worse than with the DMO.”
George Gillham adds that the huge number of different taxes to which taxpayers are liable leads to further HMRC mistakes: “Even if HMRC makes a correct decision about someone’s income tax liability, that decision will have all sorts of consequences for pensions, national insurance contributions, and more. A lack of comprehensive training for frontline staff means they can struggle to look at things ‘in the round’. They change one thing but don’t – or can’t – check to see what else that affects.”
More bad news for HMRC further along complaints process
Pinsent Masons explains that HMRC has a three-tier complaints system. First-tier complaints are handled by internally by HMRC, while unsuccessful first-tier complaints can be appealed to the second-tier, also handled internally by HMRC. Unsuccessful second-tier complaints can be referred to the independent Adjudicator’s Office.
In 2011-12 (latest available data), 53% of complaints about HMRC reaching the Adjudicator’s Office were upheld wholly or in part**. The Adjudicator’s Office recommended HMRC pay compensation worth £363,954 and give up its demands for tax worth £968,782 – £1.3m in total.
Compensation included redress for ‘worry and distress’, poor complaints handling, and costs incurred as a result of HMRC’s mistakes. The compensation recommended by the Adjudicator’s Office does not include compensation or costs paid out by HMRC earlier in the complaints process.
By comparison, in 2005-6, the first year after the complex merger of the Inland Revenue and HM Customs & Excise to create HMRC, just 44% of taxpayer complaints were upheld by the Adjudicator’s Office.
Recommended compensation in 2005-6 totalled £100,022 while tax demands given up by HMRC were £370,586 – £470,608 in total.
George Gillham says: “The figures from the Adjudicator’s Office show that if you keep persevering with a complaint about HMRC through the whole complaints process, it can be worth it. You can sometimes get back the costs incurred fighting an unreasonable stance taken by HMRC or get a tax liability written off.”
“The increase in successful complaints to the Adjudicator and the huge increase in recommended payouts for HMRC suggest that the HMRC customer experience is getting worse, not better. And remember that 2005 was just after a major internal re-structuring.”
“For performance to get worse over time is incredibly disappointing.”
*Data refer to complaints received at ‘Tier One’ of HMRC’s complaints process. Data exclude all complaints made regarding tax credits. Complaints upheld include complaints upheld in full or in part.
**Adjudicator’s Office data include tax credits complaints.
Multinational law firm Pinsent Masons has advised Schütz Family Office on the acquisition of private bank Freie Internationale Sparkasse S.A..
Multinational law firm Pinsent Masons has been named as one of the top ten family friendly employers in the UK by work life balance charity, Working Families.
Multinational law firm Pinsent Masons has won Insurance Team of the Year at the Legal Business Awards 2020 for its role advising Royal London on its Brexit strategy and the implementation of a cross-border reorganisation of part of its business.
Handeslblatt and Best Lawyers recognised 23 partners of multi-national law firm Pinsent Masons as Best Lawyers in Germany 2020.
The European Commission has been notified about 385 tax breaks which may be unlawful under State aid rules over the last five years (as at year-end 31st March 2019), says Pinsent Masons, the international law firm.
Multinational law firm Pinsent Masons has looked at HMRC “task forces” that have collected another £540m in unpaid tax revenue over the last year.
For all media enquiries, including arranging an interview with one of our spokespeople, please contact the press office on