HMRC's complaints process

Many taxpayers taxed under self assessment may not be aware that HMRC self assessment phone service was closed for three months, opening on 4 September. HMRC has been piloting a new seasonal model for the self-assessment helpline by directing queries to the department’s digital services. The intention was to enable 350 of HMRC's staff to take urgent calls on other lines and answer outstanding customer correspondence. As such, the only method by which to make contact was via a letter. Callers to that line being directed to use HMRC’s online services including digital assistant and webchat.

The Adjudicator (an independent tier of complaint handling for HMRC) states in its Office annual report 2023 that HMRC’s complaints handling 'has still not fully recovered from post pandemic disruption. Although recovered in areas there are still significant backlogs in others where high-volume complaints are not expected to recover until well into next year'– hence the closure.

HMRC has a complaints system that follows a tiered structure. To initiate a complaint an online form is completed detailing the reason for the complaint (HMRC confirms that around a third of complaints are made this way). Tier 1 is where HMRC will attempt to resolve the complaint by reviewing its records. HMRC allocates someone to deal with the complaint, advising the complainant of that person’s contact details and who will subsequently advise of the outcome of the complaint. Currently correspondence is in writing but the intention is to move to phoning or emailing the complainant.

HMRC states that the majority of complaints are resolved at Tier 1. However, if the complainant is not satisfied with the outcome, then the case is escalated to Tier 2.  Approximately 7% of complaints are escalated to this level, where a different individual will review the complaint.

If the taxpayer remains unsatisfied with the outcome after the Tier 2 review, the next level is to ask for the Adjudicator’s Office (AO) to review the complaint. Being independent, their work is restricted as they can only consider and rule on specific types of complaints detailed in the 2018 Guidance as being:

·         "Mistakes

·         Unreasonable delays

·         Poor and misleading advice

·         Inappropriate staff behaviour

·         The use of discretion"

When there is a referral to the AO, the head of HMRC is made aware of the complaint. The AO's 2022/23 report confirms that during 2022/2023 they resolved 630 complaints. The number of complaints partially or fully upheld was 293 – 41 more than the previous year.

In some cases, HMRC can offer financial redress for costs incurred, provided that they are proportionate e.g., postage, telephone costs and professional fees. Payments for 'worry or distress' may be applicable if someone has suffered particularly from the consequences of a mistake, although HMRC notes that these payments are typically modest and usually under £100.

Should a case reach the AO they too have powers to recommend compensation. The AO report states that during the year 2022/23 it recommended HMRC pay £303,799 as redress for 'worry and distress, poor complaints handling, costs and liability given up' (i.e., the amount not collected). The low amount of compensation awarded could explain why so few complaints are elevated to the AO. There is a final appeal level should the taxpayer remain dissatisfied – they can write to the Parliamentary and Health Service Ombudsman (PHSO) via their MP.

HMRC receives tens of thousands of complaints, yet the AO's annual report shows that only a tiny fraction reaches them. The complaints process usually takes six months or more to reach a decision; taking time, resources and money, made worse for the complainant because penalties and interest charges continue to accrue.