Tax getting more taxing as HMRC feels the squeeze

A study suggests dealing with the taxman is getting increasingly difficult. But is it really HMRC's fault?

by Emma Haslett
Last Updated: 13 Jul 2011
Very few people will consider it a pleasure to deal with Her Majesty’s Revenue and Customs. But new research has revealed a three-fold rise in the number of people whose experience has been so bad that they've successfully lodged a complaint about their treatment. According to figures unearthed by accountancy group UHY Hacker Young, the number of complaints against HMRC that were ‘substantially or wholly upheld’ has almost quadrupled in the last couple of years, from 108 in 2008 to 446 in 2010. And given that the department continues to suffer some pretty hefty staffing cuts, we suspect that the worst may be yet to come...

The data, which came via the Adjudicator’s Office, the body responsible for dealing with complaints about HMRC, showed the proportion of complaints being wholly upheld has also risen threefold, from 7% in 2008 to 21% in 2010 - so either taxpayers are getting more savvy, or HMRC's errors are getting more blatant.

Among taxpayers’ gripes were PAYE coding errors, which led to the department collecting £238m too much in 2009/10 (almost one and a half times as big a surplus as in 2008/09). Incorrect tax codes were also a big issue, resulting in HMRC under-collecting £132m of taxes. And VAT penalties proved to be problematic too: 56% of complaints on this subject were upheld (so if you’ve been slapped with a fine for this one, you know what to do).

Can HMRC do anything to improve things? Well, not necessarily. As part of the spending cuts, HMRC has been given a target to reduce its outgoings by 15% to £3.2bn by 2014/15, which will mean cutting about 10,000 jobs. And all of this is taking its toll on morale: according to a report published by the department itself in December, just 14% of staff felt motivated to provide the best possible level of customer service. No wonder so many mistakes are being made...

Still, perhaps they can take solace in the fact that over-paid tax isn't necessarily their fault. According to a separate report by finance website unbiased.co.uk, people in the UK pay an average of £440 a year too much because they don’t get around to claiming tax credits, thus wasting around £13.5bn. What's more, 88% of people in the UK apparently haven’t done anything in the past year to reduce the amount of tax they pay. Or perhaps they've just decided that the under-resourced HMRC will only mess it up and over-charge them if they do?
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