While HMRC persists in viewing Britain’s taxpayers with suspicion, it has had to return nearly £4m last year for mistakes it made.
An undisclosed amount resulted from the intervention of the Tax Adjudicator, the independent arbiter of disputes between individuals and HMRC authorities.
In 90% of cases in the most recent tax year, the adjudicator decided in favour of the taxpayer.
HM Revenue & Customs was routinely found to have made mistakes for which it should have accepted responsibility. These included issuing incorrect tax codes, failing to apply its own rules, treating complainants poorly, giving misleading advice and causing "unreasonable" delays.
The taxman was ordered to give up £3.9 million of collection demands and issue redress of nearly £250,000 for "poor service" and causing “worry and distress”.
The post of adjudicator has been around for 21 years. Last year it resolved 2,350 disputes. The majority of cases it took up concerned instances where HMRC had sent shock bills to people who had unwittingly underpaid tax. HMRC was found at fault in 94% of these cases, with the taxpayer issued redress.
Most of the shock bills, which can run into thousands, result from cases where HMRC issues an incorrect tax code for Pay As You Earn (PAYE) employees, but fails to rectify it for several years.
A tax rule called “extra-statutory concession A19” states that these arrears should be written off if the taxpayer was not at fault and no notification was sent within 12 months of the end of the relevant tax year.
The adjudicator, Mrs Clements, said the Revenue had improved its service during over the past 12 months, but was still demanding tax that should have been written off under its own rules.
“From September, the number of complaints referred by HMRC customers began to fall to a more manageable level, with an average of 70 cases per month,” she said.
