You’re wrong, we’re right

HMRC’s corporate culture to blame for poor customer service

The recently published Adjudicator’s annual report for the year ended 31st March 2018 and reveals that elements of HMRC’s culture impacts upon the department’s initial interaction with taxpayers, their complaint handling and the action taken following feedback given to it. This is demonstrated in attitudes towards taxpayers, communication style and decision making. Surprised? No, me neither.

Role of the Adjudicator

The Adjudicator’s Office is now 25 years old and was established to resolve complaints made against the old Inland Revenue (including the Valuation Office Agency (VOA)), on an independent basis. As part of that process, the Adjudicator also gives HMRC and the VOA the opportunity to learn lessons and make improvements.

Part of the Adjudicator’s role is to hold HMRC to account in providing a service to taxpayers that meets the department’s own standards.

Where appropriate, the Office will recommend that HMRC pays financial compensation to a taxpayer in recognition of the poor level of service they have suffered, together with any relevant costs. In 2017/18 HMRC paid out £576,562 in redress for the following:

HMRC Complaint

A complaint can only be advanced to the Adjudicator’s Office after dissatisfaction following two reviews by HMRC. The Adjudicator can look at complaints about:

• Mistakes (e.g. if information has been used incorrectly or overlooked);
• Unreasonable delays (e.g. where matters haven’t been dealt with promptly);
• Poor or misleading advice (e.g. inaccurate information has been given);
• Inappropriate staff behaviour (e.g. rude responses or refusing to listen); and
• The use of discretion (e.g. not taking account of exceptional circumstances)

The following however are outside of the Adjudicator’s remit:

• Matters of government or departmental policy;
• Complaints where there is a specific right of determination by any court, tribunal, or other body with specific jurisdiction over the matter;
• Valuation decisions of Statutory Officers in the VOA;
• Complaints about whether HMRC or VOA have complied with the Freedom of Information Act 2000 and the Data Protection Act 199;
• Complaints about an ongoing investigation or enquiry; and
• Complaints that have been or are being investigated by the Parliamentary Ombudsman

Once the Adjudicator has given their decision but a person still remains unhappy, then they can ask their MP to put their complaint to the Parliamentary and Health Service Ombudsman.

Complaints in 2017/18

During the year ended 31^st March 2018, the Adjudicator received 967 new complaints, 24 of which were VOA cases. This represented a 15% decrease on the previous year. The Office already had 630 cases on hand at 1^st April 2017 and 393 outstanding as at 31^st March 2018, meaning that they resolved 1,204 during the financial year.

Tax credits have, for some years, been the dominant cause of complaints and they formed 57% of complaints in 2017/18. Although the report does not provide a breakdown of other areas of complaint, PAYE errors and Extra-Statutory Concession (ESC) A19 (giving up of tax by HMRC due to their error) appear to be popular.

The percentage of cases upheld by the Office was 39%, two percent down on the previous year. It is worth pointing out that in 2013/14 the rate was 90%.

Signs of continued focus on improving complaint handling within HMRC have been noticed by the Office. However, in practice the benefits and principles of good complaint handling and learning are not fully understood by the department, which is manifested in the way individual complaints are handled. Although there are areas within HMRC that are demonstrating consistent improvement and evidence of good practice, there is still more work to be done.

Anyone who has cause to complain about HMRC should be able to expect a similar level of service, focussed on putting things right when they have got it wrong, but that is not always the case. HMRC not acting consistently? Surely not!

The average time taken by the Office to resolve a complaint was 7 ½ months. Whilst this represented an improvement on the 9.7 months in 2016/17 and is within their own performance objective of 10 months, this still seems a long time for an individual to wait for resolution, particularly given that they will have already gone through HMRC’s two tier complaint process. For the year ending 31^st March 2019 the Office has set itself a target of resolving complaints, on average, within 6 months.

During the year, the Office received 13 complaints about their level of service, the majority of which were about the length of time it took to begin their investigations.

Case studies 

The report contains a number of case studies that provide a flavour of the different scenarios that gave rise to complaints. One in particular, involving Mrs F, deserves mention:

Mrs F disposed of a property giving rise to a capital gain. However, she believed that most of the gain was exempt because it qualified for private residence relief. HMRC had a different view and the matter ended up at tribunal, where Mrs F lost.

After the tribunal hearing, Mrs F obtained a letter from her estate agent confirming her residency at the property which she presented to HMRC. However, HMRC said that the letter did not alter the tribunal decision.

Mrs F complained to the Adjudicator that:

1. HMRC’s refusal to accept the estate agent’s letter amounted to a ‘failure to make proper and timely use of information’ and therefore ESC A19 should operate to write off the capital gains tax (CGT); and
2. HMRC’s actions in trying to collect the CGT and other outstanding debts amounted to harassment.

The Adjudicator cannot consider matters decided by a court or tribunal but did consider the second part of Mrs F’s complaint. It was found that HMRC had, in the main, acted reasonably and within their own guidance in their actions to collect the tax. HMRC’s guidance advises that warning letters should be issued to inform taxpayers of debts and warn them of the consequences if those debts remain unpaid. The Office saw no evidence that any such letters had been sent to Mrs F and when asked why HMRC had not followed their own guidance, they said guidance is just that and that they do not have to follow it and it is not a mistake or error not to! Whilst the Office concluded that HMRC’s handling of the matter did not amount to harassment they did find that the department guilty of poor complaints handling.

Going forward

Some context has to be provided to highlight the fact that the vast majority of complaints HMRC receives are dealt with inhouse. The department’s annual report and accounts for 2017/18 confirms that they received 77,410 new complaints in the year and resolved approximately 99% of them without recourse to the Adjudicator’s Office. However, there is evidence to suggest that for every taxpayer who complains to HMRC, there are many more who have been treated similarly who do not. When considering the outcome and learning from individual complaints, therefore, the Office considers both the complainant and what this says about HMRC’s customer service for the silent majority.

A new service level agreement has been put in place which sets deadlines for HMRC to provide information to the Adjudicator. Also, the Office will continue to support HMRC to learn from complaints and for the next two years will develop a greater role in supporting the department to improve complaint handling and broader customer service. Not wishing to demean or undermine the good work of the Adjudicator’s Office in any way, but don’t hold your breath!

The full report can be viewed here Adjudicators Report 2018.