HMRC forced to almost double total pay-outs to workers over poor service and distress
The data suggests the taxman paid out a total of £718,000 in 2022-23, which was up from £371,000 the previous year.
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Compensation paid to taxpayers by the HMRC due to its poor service, including long waits, has surged 94 percent, according to new figures.
The data suggests the taxman paid out a total of £718,000 in 2022-23, which was up from £371,000 the previous year.
The increase came on the back of a 65 percent increase with problems of long waiting times and getting through on jammed HMRC phone lines a major issue.
The total number of complaints that made it through the claims regime rose from nearly 20,501 in 2021-22 to nearly 34,000 in 2022-23.
HMRC must pay redress in cases where taxpayers have suffered distress because of its poor service. It must also reimburse costs incurred by a taxpayer although receipts or invoices are required as evidence.
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The figures are likely to be the tip of the iceberg, with Graham Boar, of accountancy firm UHY Hacker Young – which obtained the figures in a freedom of information request – saying people often have to fight hard for the compensation they are due.
He said: “Successfully getting meaningful compensation from HMRC for a delay is a very admin-intensive process. Many customers simply give up trying to secure the compensation they deserve.”
Customer service at HMRC has fallen to its worst ever level as the under-resourced department struggles to support a record number of taxpayers.
The latest statistics show that the tax authority left around a third of phone calls unanswered between April 2023 and February this year.
Meanwhile, it failed to respond within 40 days to around two million letters and online forms, out of the total 19 million received.
HMRC has faced a huge rise in enquiries as frozen thresholds have pushed a growing number of people into the tax net.
Meanwhile, a rise in tax fraud has only added to the struggling department’s workload.
Joanne Walker, of the Low Incomes Tax Reform Group, told the Telegraph: “HMRC are pushing more taxpayers towards using digital channels to alleviate the pressure on phonelines and post services.
“However, many of these digital channels are not yet good enough. Many taxpayers who use the digital platforms also find they need to contact HMRC by phone or post, either to seek reassurance that they are doing things right, or because their position is complex and the digital service does not have the answers.
“Alongside this, there has been a very high level of activity by unscrupulous tax refund companies over the past year, leading to a flood of tax refund claims to HMRC, many of which are erroneous. These claims add extra work to the already stretched customer service teams.”
Tax refund companies are unregulated, and some firms will take a large cut of the rebate owed to taxpayers, or fraudulently claim a rebate on someone’s behalf.
Gary Ashford, of the Chartered Institute for Taxation, said at the time that the announcement showed HMRC “can’t cope”.
Labour has pledged to invest £855m in HMRC should it win the next election, which would go towards closing the tax gap and improving customer service.