Massive delays at HM Revenue and Customs are seeing people wait months for money they are owed. An investigation by a national newspaper discovered that staff could take as long as 10 months to carry out tasks that should be done in 15 days.
It also uncovered a host of mistakes, including a 'fat finger' error that saw a business being chased for money it didn't owe. The Times investigation analysed HMRC's performance, revealing that targets were being missed in 14 out of 27 service categories.
This included appeals against tax penalties, payment of self-assessment refunds and marriage allowance claims. The Times said that accountants had become concerned to the point that representatives of all four professional bodies - the Chartered Institute of Taxation, the Association of Taxation Technicians, and the Institutes of Chartered Accountants in England and Wales and Scotland - have written to Myrtle Lloyd, the director-general of customer services at HMRC expressing their "longstanding" worries about services.
David Feldman, who worked for HMRC for three decades as a tax investigator and is now a tax advisor, said his clients could be "routinely" waiting for a year to resolve tax disputes. He said: “When I saw that the Metropolitan Police had been put in special measures I thought the same should apply to HMRC. The service is worse than at any time when I worked there.”
There are suspicions that the HMRC's home working policy, which has been in place since the first Covid lockdown, are behind the problems. The Times reported that, until the end of 2021, staff would only spend an average of one day a week in the office.
There was also a redundancy programme in 2020, with local offices also replaced with regional hubs, and this has been cited as a factor as well. But HMRC strongly denied to The Times that staff working remotely - which is now for an average of two days a week - was responsible for service issues or the office mergers.
In October it said that more than 16,000 staff who had worked from home during the pandemic were back in offices, but admitted that staff overall were still working from home an average of four days a week. It said this week that staff can now work from home two days a week.
It said documents were scanned by workers in offices so those based at home could process them. It did admit that targets slipped considerably during the pandemic as staff were redeployed to help with the Covid response. It maintained that overall staffing had increased over the past six years.
The PCS union said 2,000 roles were axed in a reorganisation in 2020. HMRC said that staff levels had increased slightly between 2016 and 2021.
The Times' analysis of HMRC's performance dashboard revealed that the worst service area was helping people to get a refund from income tax deducted from savings. A performance target of 15 working days was being missed by a wide margin - with 159 days the average wait.
Disputes over a tax overpayment took 138 days instead of 15; making group business registrations for VAT took 76 days against a target of 30; and registering a commercial property for VAT took 214 days instead of 30.
An HMRC spokesman said: “We’re sorry that customers have experienced delays with some of our services. Overall customer satisfaction is above 80%, but we know there’s more to do and we’re recruiting more staff.”
Myrtle Lloyd replied to the accountancy bodies’ letter, saying the department had made “solid progress” in the last tax year, and that this would continue.
But The Times said there were chronic delays at more than half the tax office’s departments. Some queries were taking almost a year to answer and urgent letters and emails have piled up at regional offices.
It said taxpayers were reporting lost correspondence and being chased by debt collectors for money that they do not owe. One tax adviser said that VAT business registration letters, which have to be processed by hand, were allowed to stack up for months of the pandemic.
“We were told that, when the lockdown first happened, there was a lot of post sitting unopened at the office. Nobody had collected it and nobody was dealing with it,” said a senior member of the Chartered Institute of Taxation.
HM Revenue & Customs has not put its usual monthly performance updates on its website since February, but last week it launched a live dashboard that gives tax advisers an indication of the state of enquiries.
James Geary, from the accountancy firm Randall and Payne, said: “HMRC is clearly under-resourced, and often clearing a backlog involves reallocations of staff from other areas, which then fall behind.”
Stephen Hugill, who used to run the consultancy GQI in Middlesbrough, had a demand from CCS Collect, a debt-collection agency, for £1,589 in unpaid VAT in November. He thought it was a scam because the demand was for GQI Services Limited, in Hull — a company that is nothing to do with him.
Hugill complained to HMRC but did not get a response until March 21, when the taxman admitted that it had mistaken his company for another firm.
Hugill demanded a refund of the £450 he had paid his accountant to deal with HMRC on his behalf. “I can’t see why I should have to pay for incompetence,” he said. After Hugill contacted The Times, HMRC apologised and said he would be reimbursed.
HMRC said it was responding to 79% - against a target of 80 per cent - of VAT correspondence within normal service targets of 15 or 30 days.
It said that average call-waiting times fell by seven minutes from April 2021 to February and that it has increased the proportion of correspondence cleared within 15 days: “We’re sorry that customers have experienced delays. Overall satisfaction is above 80 per cent, but we know there’s more to do and we’re recruiting.”
You can complain through gov.uk if you’re unhappy with the service. HMRC said 93% of complaints were dealt with at this stage, with taxpayers who win their case getting an apology and recompense, including costs.
Remaining complaints are escalated to what HMRC calls Tier 2. After this, if you are still not happy you can go to the Adjudicator, a free, independent service through gov.uk or by writing to The Adjudicator’s Office, PO Box 10280, Nottingham, NG2 9PF. The next step after that is the Parliamentary and Health Service Ombudsman.
HMRC said it would consider refunding any reasonable costs caused by its mistakes, so you will need to keep receipts. HMRC may also pay out for distress.
