Do accountants complain about HMRC's service enough?

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Jennifer Adams considers the work of the Adjudicators Office following the issue of their 40-page annual report last month and asks whether the service is being used effectively.

In HMRC's ideal world where customer service is supposedly an absolute priority, there should be no need for an independent Adjudicators' Office (AO). However, last year 5,802 direct enquiries were made to the AO, with 967 new cases against HMRC being considered.

Of the 1,181 cases reviewed by the AO during the year, 389 complaints against HMRC were upheld either completely or in part. The report states that overall the number of complaints partially or wholly upheld decreased to 39%, and for tax credits the upheld rate was 46.6% (note these percentages take into account those cases that were withdrawn).

When placed alongside the larger figure of total taxpayers (31 million) these statistics fade into insignificance being that apparently 98.5% of complaints are resolved internally through HMRC's 'two-tier' process, never getting as far as the AO's desk.

HMRC sees this percentage as a success for its two-tier process and places great score on this fact. The word 'resolved' in HMRC’s parlance means not getting through to AO or higher rather than being resolved to the taxpayer’s satisfaction.

In the tax year to date, HMRC has dealt with 18,997 complaints. In June alone 5,764 were formalised under Tier 1, 48.3% were not upheld, with only 508 making it through to the Tier 2 stage (HMRC Monthly performance update June 2018).

More likely the reason why the numbers reaching the AO are small is that the process puts people off for little gain (although 1,204 complainants were annoyed enough to stay the course all the way to the AO last year).

As commented by accountsdragon in a recent story on HMRC’s complaints strategy: “Most of my clients with RTI queries/complaints simply give up as it costs more to try and resolve.”

The role of the Adjudicators' Office

The role of the AO is set out in the leaflet 'The role of the Adjudicator', which is to rule on whether HMRC and the Valuation Office Agency (VOA) have handled a complaint “appropriately and given a reasonable decision”.

Their work is restricted as they can only consider and rule on specific types of complaints namely:

  • Mistakes
  • Unreasonable delays
  • Poor and misleading advice
  • Inappropriate staff behaviour
  • The use of discretion

The impact of the Adjudicators' Office

The role of the AO is not just to act as judge and jury. Where the office has had most success is persuading HMRC to reconsider their working in specific areas leading to re-education of HMRC's staff.

When a matter is brought to the attention of HMRC's powers-that-be by the AO, they at least listen. One area quoted in the report where this has resulted in HMRC reviewing their methods is in their interpretation of 'Extra Statutory Concession' (ESC A19) under which many complaints are made.

This ESC refers to the situation where HMRC delays in using information presented with the result being an underpayment tax. Under this ESC, HMRC is permitted to “use their discretion” to agree to a request not to collect certain liabilities in respect of income tax and capital gains tax if the information had been provided within 12 months after the end of the tax year in which the return was received.

Whether ESC A19 should still be around or updated is the matter for another article, and in fact, in 2012 HMRC commenced consultations on revising the text but nothing has happened despite several years having passed.

However, in dealing with the cases before them the AO became increasingly aware of inconsistencies in HMRC's dealings; so much so that they felt the need to collect evidence of the impact of the “incorrect application of ESC A19,” stating that HMRC's “misinterpretation was undermining their reputation” and recommending that staff be better trained in this area.

The fact that their work persuaded HMRC to take action is success indeed for such a small office, but obviously their impact is limited overall bearing mind that relatively few cases land on their desks. A change of HMRC's procedure can only be highlighted as other, similar, cases are brought before the AO for review. There are various graphs and statistics within the report but it would be useful to know the number of complaints under each type, and not just reporting on the two areas where success has been achieved.

Another area quoted in the report as being an ongoing matter is with reference to the Tax Credit Office, which has not been applying notional entitlement regulations as expected should the guidance had been correctly followed.

Ruling on compensation

Should a case reach the AO, it has powers to award compensation if it deems a claimant has lost out financially or suffered anxiety or distress as a result of HMRC's error or delay. Page 15 of the report states that during the year 2016/17 HMRC paid a total of only £576,562 in redress for wrong and distress, poor complaint handling, costs, and “liability given up” (ie the amount not collected), with only £165 granted for “financial loss”. This is a massive decrease on the £1,351,040 compensation total shown in the previous years' report, with no reasons for the decrease being given.

It would be helpful to taxpayers when deciding whether to take their complaint all the way if the report gave more detailed figures including the highest and lowest amounts awarded, possibly in bands.

Even so, the low amount of compensation now being awarded and the derisory total amount of £22,020 awarded for “worry and distress” is the answer to the question as to whether a complaint should be elevated to AO. Obviously the AO does not believe that such cases cause worry and distress or cost the claimant.

The future for the Adjudicators' Office

The AO is aware of the importance of their role, and particularly of being independent. It also appreciates the need for a quicker turnaround in cases being reviewed.

The report reiterates that its business plan published in November 2016 included making changes to their internal systems to enable a shorter time to process complaints (at the time an average of 40 weeks). That aim is to be applauded considering the fact that the complaint might have taken some months to arrive at the AO. The report states that their current timescale is down to 30 weeks, but in future it would not be unreasonable to assume that the whole complaint process could take more than a year from start to finish.

Among the list of aims listed in the report that may have a greater impact on the workings of HMRC is the introduction of a new six-complaint classification strategy, the intention being to “help identify core issues ... giving a regular report of feedback to both HMRC and VOA on each case resolved”.

The department costs £2,844,394 a year to run with only 60 staff (an increase on 56 in 2016/17). There is clearly a need for an independent AO, not least if their recommendations result in amendment or review of HMRC procedure. However, although the office does get results in getting HMRC processes at least reviewed, it must be difficult to have a large impact with the small number of employees.

The reduction in compensation awarded can only result in fewer cases being elevated. In a few years time, it will not be a surprise if a future report shows that the only cases being elevated to AO are those where claimants want to make a point rather than seek recompense.

Further info:

About Jennifer Adams

Jennifer Adams is Consulting Editor of AccountingWEB and is a professional business author specialising in corporate governance and taxation. She runs her own accounting and consultancy business with offices based in Surrey and Dorset.

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06th Aug 2018 16:28

"Do accountants complain about HMRC's service enough"?

Akin to most of the "establishment", in recent years - don't accept blame and, don't apologise.

As I reach the Autumn/Winter of my working career, I tend to have as much respect, for HMRC and other Government departments, as they seem to have, for the wider population. In other words, very little, if any.

The very idea, that one group of individuals/organisations, could bring about material change, to the arrogance, which is displayed by HMRC etc, is a joke. Lip service is the only "service" which this failed Government department provides and, like many other agencies, is why the "Great" has gone from Britain. A once great island nation, which is generally ridiculed throughout the world.

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By djtax
07th Aug 2018 11:46

Do accountants complain about HRMC enough? Nowhere near! How many of us clock the hours spent rectifying all the silly little errors from HMRC (let alone the big ones) - and who actually passes that cost on to clients rather than take the hit ourselves?

For most of my 30 year career I have felt we accountants collectively do not give HMRC anything like the feedback they deserve (at least I tried, with 15 years involvement at our local WT group) - and our professional bodies seem too supine on this subject.

Without an adequately strong voice I regret to say we deserve what we get.

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By mike01
08th Aug 2018 11:28

I totally agree with Chris.I am a former HMIT but left the department in Jan 1983 and given the direction of travel of HMRC I am glad I left when I did.
I am very much in the winter of my career and have sadly watched,with great dismay,the decline in government services generally over the last 20 years in particular.The arrogance and utter incompetence now displayed by HMRC beggars belief.
As accountants we probably all could complain on a weekly basis but it is simply too laborious and time consuming and usually not cost effective to do so.
As we all know there were numerous errors in last year's HMRC software so to discover several errors already this year is truly amazing!
I have now found an error in how HMRC calculate interest charges as they are failing to allocate tax payments in the most efficient manner.I have challenged the charge on a point of principle but what a hassle to do so!Needs another re-write of the software!
I need a drink but given the time of the morning I will have to settle for a cup of tea!

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08th Aug 2018 10:42

I sent in a 'Letter of Complaint' on 02 Aug 2017, clearly marked as such within the body and also on the envelope, by recorded delivery and first class post. It was signed for on 07 Aug 2017 at 7:36 am. To date, I have not had a reply!

That's one way of dealing with a complaint - ignore it!!

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08th Aug 2018 11:08

Very interested in these comments. I sit on the Agents Advisory Group and have strenuously argued for recompense for agents who have incurred extensive WIP in respect of the recent introduction of the Trust Registration Service. One firm incurred over £30k in WIP because of a particular stance in the guidance which was changed later. Sadly, as far as I know no one has billed the client and so cannot use this service as far as I am aware. This is a fault in the system - why do we have to bill the client first and then seek recompense from HMRC/Adjudicator's Office?

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to Lawskills
09th Aug 2018 16:24

I had the same problem with a SA case that was really inefficiently dealt with by HMRC, who refused to accept responsibility. I persevered and they agreed to pay me providing my client paid my fee first and the claim was made by the client. I assured the client that, if HMRC did not reimburse him, I would return the fee.
HMRC then argued about the quantum. I held out and insisted on the case being considered by a higher grade officer, who accepted its validity and paid.
I spent more time pursuing this recovery than the amount I received. But I was determined that they would not get away with it.

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By djtax
to Lawskills
10th Aug 2018 10:09

I have argued that point for over a decade (at WT and the occasional face to face meeting I have managed to set up with HMRC head office staff) - to no avail!

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08th Aug 2018 11:19

As an agent acting for clients you could complain about HMRC's ineptitude everyday but we do not have the time and to be honest why bother? Only this week having sent a copy invoice to HMRC to have a client's fees reimbursed, HMRC refunded the amount net of VAT and I had to ask them why? HMRC "It was an oversight" No, it was incompetence and this is endemic throughout the entire organisation.
I Use Official Complaints very sparingly but usually to try and get a response to HMRC. Having sent 3 letters since March I have just recently had to lodge a complaint just to try and get a reply.
One compliant I lodged 2 years ago I did get the local MP's office involved because the complaint was never responded to.

As I have posted elsewhere the entire body wants rebuilding from the bottom up. Lets be controversial here, recruit staff and train them properly, even in literacy as this seems to no longer be something to worry about at HMRC.
None of my complaints reach the AO it is just too much hassle.

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By Paul FD
08th Aug 2018 11:31

As another "autumn career candidate" I would add my voice to the points above. Like all large organisations, HMRC has designed its systems where you either comply or you are not allowed to join. The systems are built for their convenience while disengenuously describing you as a customer. The complaint processes are all designed to frustrate and push you down a labrynth of mind-numbing bureacracy that you just give up. As accountants working on the supply side of the economy we have all seen the introduction of systems that now only work with penalties and fines without any acceptance of falibility on their side. We will be expected to introduce MTD, get it working for them and then sit back as the fines come out for yet another system designed around coercion. iIt is ironic that the more politicians claim to represent ordinary people, especially "hard working ones",the more they make it harder for them to go about their business. The message is that we like you to be hard-working but on our terms - don't even try to be self-employed or if you are we will tax you as an employee anyway which is where they would like all people to be - all in the name of fairness. The AO should realise that what they see is the tip of an enormous iceberg of frustration and stress and good luck to those tenacious enough to push their complaint up that slippery slope.

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08th Aug 2018 12:47

We recently made a complaint to the Adjudicator's Office so others might be interested in the outcome.

A client doing their own payroll was sent demands for £2000 from HMRC. The client could not work out what the problem was so ignored it. HMRC sent bailiffs around.

We got involved and established what the problem was and it was poor HMRC systems that could not handle a particularly unusual situation. Protracted calls and letters finally established nothing was owed and we had letters in writing to confirm this. During this period HMRC made no attempt to do any work themselves but just kept demanding the money 'due'. We complained that it had taken hours to sort out the problem and HMRC agreed to compensate us. We billed the client (for nothing like the time spent) and HMRC paid up. So far so good. However, HMRC continued to demand the money and insist that we should send in EPS to correct their system. We refused. So HMRC continued to demand the money and we had to continue to fight them. Eventually (it took almost two years from start to finish) I spoke to somebody who had some sense - they agreed HMRC were wrong and that if we billed our client HMRC would pay further compensation to them.

To cut a very long story short, they reneged on this verbal agreement because the compensation went over £1000 and this had to be authorised by somebody different, who refused it.

Incensed by all this I went to the Adjudicator thinking we had a cast iron case (HMRC admitted they were in the wrong and we were promised compensation). After 9 months, and significant correspondence, the Adjudicator found in favour of HMRC on the grounds that 'HMRC acted within their guidance and policy'.

Lessons learnt:
1. Don't bother with the Adjudicator as it is waste of time and effort.
2. Any problems with HMRC's systems (RTI in particular) insist they open a formal investigation and make them do the work to found out what has gone wrong rather than waste hours and hours which nobody will pay you for.

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08th Aug 2018 13:01

I have also sent letters to HMRC clearly marked ''complaint'' most of the time they just get ignored!

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08th Aug 2018 14:29

Personally speaking - yes.
I expect HMRC to provide as good a service as I give them. Everything I provide is within the legislative time limits. Touch wood , Section 9A enquiries haven't come my way for yonks but any responses would have been provided within 3o days - or acknowledged with an appropriate timescale. So if the service isn't reciprocal , a complaint is in order EVERY TIME . Why shouldn't HMRC be accountable as with any other institution ?

Sadly , ''Your obedient servant'' is no longer there whilst continued staffing cuts mean the Revenue's service is now akin to a third world country . Coupled with a call centre , unfit for purpose , it's obvious the delays , mistakes and general incompetence is not going to improve. So complain , remind HMRC of its duty of care , request a full report of what went wrong and why ; demand [ not ask for ] compensation Sadly this is now the only way to get the best service for clients. I'm probably one of HMRC's most annoying 'customers' but at this stage of the campaign , I couldn't give a damn.
''Working Together'' disappeared a decade or so ago.

Coincidentally , I've just had course to contact the A.O. regarding HMRC's policy of issuing their '' Tax Calculations'' - e.g. for non SA taxpayers . Invariably these are always incorrect by virtue of using ESTIMATED figures for investment income. Two years running for one client meant a demand for tax where a tax refund was due ; followed by a small tax refund instead of a much larger repayment based upon actual figures , when the R40 was completed / submitted.
Imagine the wrath of HMRC if estimates were used in tax returns - or , if used , there was no indication to that effect on the return.
I pointed out the time wasted by the Revenue , myself , my client with these incorrect estimated calculations.
Like red rag to a bull , the Revenue official advised me ''...........we don't use estimates sir, but we may use the previous year's figures within our 'Tax Calculations..........''.
It will be interesting to see the A.O.'s response.

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08th Aug 2018 17:15

It's really sad but the HMRC systems are pretty awful and the staff who are left seem demoralised, undertrained and with no support for themselves. Everything we hear about MTD and Brexit makes it sound worse. Too few staff trying to go too much, no wonder they f*** so much up

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By tedbuck
09th Aug 2018 11:47

I still think the only way to improve matters is a concerted effort led by the accounting bodies to get everybody to complain every time they encounter crass stupidity or just don't get replies and so on.
If HMRC are flooded by complaints they will just ignore them but if that brings more complaints eventually they will either be completely submerged or someone in Government will be forced to do something - wouldn't you think?
Well I suppose they would develop AI software to sort out the complaints and bin them as they do now by hand it seems.
Actually I have been fortunate in that some of my complaints have actually been satisfactorily dealt with.

The worst cases have largely been to do with DMB and RTI. The first have no idea what is going on in the real HMRC world and cannot access the files and when they sub it out to the private collectors the links get even more tenuous and out of date and they just don't come back to you when you answer their questions. RTI - well it seems to work and then they write to tell you that you owe money and you point out that you don't and they agree and 'close the file'. Then a year or so later they write and say they are owed money, same details, same money, same answer just more time wasted.
HMRC is useless and without our profession would be completely sunk (they even have to get accountants to correct their software) yet they seem to make our lives as difficult as possible.
I suspect it is the usual problem of too many university graduates with no experience of the real world designing systems without appreciating that ordinary people actually exist who have few technical skills. Sounds just like HMG doesn't it? Act first and think afterwards.

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to tedbuck
16th Aug 2018 13:10

Good idea! But why not take it one step further and complain to your local MP?

Explain what HMRC is guilty of, and the effect it is having on your business efficiency, and the fact that they set deadlines on replies from us agents without reciprocating at the same speed that they expect from us.
It costs us time and money and causes stress. Ultimately unproductive work means no income for agents and NO TAX revenue for the Treasury.

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15th Aug 2018 11:30

Perhaps the answer must be that we DO NOT CORRECT HMRC's errors but let it go to to the point where we can take it to a FTT. Assuming that the Tribunal is not biased, it should (hopefully) find in our/the client's favour and (even more hopefully!) castigate HMRC so the case gets a wider airing!

I really should wake up and stop dreaming!

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15th Aug 2018 11:41

Official complaint lodged 16 July 2018.
HMRC's manual - acknowledge within 5 working days
Full (or interim) report within 15 working days.
I am still waiting................

Complain about the Complaints Section?

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20th Aug 2018 14:07

Still nothing to acknowledge my complaint.

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