Adjudicator & HMRC Complaints

The Adjudicator's Office describes itself as a fair and unbiased referee looking at complaints about HMRC, Valuation Office and The Insolvency Service. Where a taxpayer is dissatisfied with the outcome of a complaint against one of these departments they may call upon the services of the Adjudicator.

Judy Clements, The Adjudicator, however, is not omnipotent as she cannot deal with complaints arising from technical tax or legal matters, nor with policy issues. Should the Adjudicator not be able to pacify a complainant then that person can progress their grievance to the Parliamentary Ombudsman.

In the past, many have been frustrated by the time it has taken the Adjudicator's Office to deal with complaints but, according to its annual report, it is making progress. The office has finally completed its recovery plan and cleared its backlog of case. In 2010/11 the Adjudicator handled 14,861 enquiries and resolved 2,284 complaints, 24% more than the previous year. The number of cases outstanding at 31st March of this year stood at 992, which contrasts with the 2,041 that were outstanding at 31st March 2010. It now has the lowest number of cases on hand since 2005.

It comes as no surprise that a substantial number of complaints are made against HMRC but this is mainly due to the department's handling of tax credits and, in particular, their refusal to write off overpayments. In the table below, Outcome of Investigations, 1,509 of the total number of complaints resolved related to tax credits.

In other tax matters, a large number of complaints involved extra-statutory concession (ESC) A19, 'Giving up tax where there are Revenue delays using information', something that received media attention not so long ago. A case study in the report provides an example of such a complaint made by Mrs K. The lady in question received an occupational pension. HMRC closed its records and as a result tax arrears built up over four years. Whilst the Revenue accepted its error it maintained that Mrs K should have realised her tax code was incorrect and, as such, ESC A19 did not apply. It was only upon the Adjudicator's suggestion that HMRC reconsidered their decision and eventually reversed it. Not only was Mrs K's tax bill waived but she also received compensation from HMRC for poor complaint handling.

A further example of HMRC's mishandling of a complaint is contained in the case study of Mrs Z whom the department had incorrectly recorded as being dead. Not only did this cause the lady distress but it also resulted in her not receiving her state pension! Although HMRC paid out compensation in recognition of the upset they had caused, the Adjudicator asked that they pay a higher level of compensation which they duly obliged.

Details of HMRC's compensatory payments are set out in the table below, Redress Paid.

The above table also includes NICs.

The report makes several observations about HMRC's behaviour borne out of the various case studies:

    •    HMRC's expectations of taxpayers in understanding their tax affairs is too high.
    •    HMRC often fail to establish the relevant facts before reaching a conclusion.
    •    Lack of communication across the department.
    •    HMRC do not adhere to their own internal guidance.

Whilst HMRC has welcomed the Adjudicator's report and made the usual sound bites, what we all want is for the department to listen and learn – quickly!