One of the questions that I get asked is how to complain to HMRC and whether it is a worthwhile thing to do. This is often borne out of frustration with the way in which HMRC work, considerable delays within the system and HMRC officers seeming to be very intransigent in dealing with enquiries.
HMRC have very extensive powers to investigate the affairs of a taxpayer which is backed up with specific information and inspection powers. In the course of this, and the other work that the department does, it is inevitable that things go wrong. Mistakes are made but HMRC are notoriously unwilling to admit this!
There is a manual called Complaints Handling Guidance and this recognises that there will be complaints and some of the complaints will be justified. However, the process is not a remedy for all grievances against HMRC and it should only be used where it is appropriate to do so.
The complaints process used to be contained in a Code of Practice, but is now found on the gov.uk website.
What can you complain about?
The complaints process can be used if your client is unhappy with the service provided by HMRC. This can include where there have been unreasonable delays, or other unsatisfactory service, including mistakes and poor or misleading advice.
If an HMRC officer has failed to follow the correct procedure, perhaps by not issuing the relevant factsheet at the right time, that may be a justifiable cause for a complaint. Whether it is worth pursuing a complaint in any given situation is a completely different issue.
What can’t you complain about?
The complaints process is not appropriate for dealing with all grievances about HMRC. Where the client disagrees with a tax decision or a penalty, the appropriate appeals procedure, or judicial review, as relevant, should be followed. However, it is not always straightforward. In the course of enquiry, there may be a technical argument being undertaken which might be the subject of an appealable decision at some point (perhaps by issue of a closure notice) but in the meantime you have a complaint about the officer dealing with the enquiry. An example from my own experience was an SDLT enquiry where the officer concerned simply rejected every argument made by saying ‘you are wrong’ without justifying his stance. My own personal view was that he was out of his depth and not really understanding the technical point but this was clearly unsatisfactory service.
In addition, complaints about serious misconduct by HMRC staff are dealt with by a different process. The gov.uk website states that serious misconduct includes assault leading to death or serious injury, corruption, fraud, and unauthorised disclosure of customer information. HMRC’s handling of these complaints is overseen by the Independent Office for Police Conduct. These types of situations would be very rare.
How to complain
While other parts of HMRC are encouraging interaction with it through online channels, that does not apply to the complaints process, at least as far as agents are concerned. Advisers will need to complain on behalf of their clients by post, as the online process is, currently, reserved for taxpayers complaining directly to HMRC. This may change in the future but that is the current position.
It is recommended that advisers submit their complaints in writing, in accordance with the procedure, to ensure an audit trail, rather than complaining by telephone. The relevant contact details can be found on the gov.uk website, at the following link.
The postal address given for complaints about a compliance check or a HMRC enquiry is:
Customer Compliance Complaints
HM Revenue and Customs
BX9 2AB
United Kingdom
The complaint should set out all relevant facts, and refer to any material correspondence or documents, evidencing the poor service by HMRC. Where HMRC have not followed their procedures, or the HMRC Charter (see here), this should be referenced in the complaint. What is clear from this is that you do have to be able to point to actual poor service rather than just being slightly fed up with what has happened. Your client may be very upset at having their tax position challenged and the officer concerned being unwilling to accept their viewpoint but that is not the same thing as being given poor service.
The submission should also indicate the required remedy, and this should be established with the client. If costs are being claimed, full details should be provided and supported by receipts. The usual costs in such circumstances may include postage, phone charges, and professional fees. When considering whether to refund the claimed costs, HMRC will take a view as to whether those costs are reasonable. They will not make a claim for costs not incurred such as ‘opportunity cost’ ie the lost revenue from time spent dealing with the enquiry. If the case has caused significant anxiety and distress, then some additional compensation may be claimed but this is likely to be minimal and only paid on an ex-gratia basis. However, any claim for excess damages should be included in the initial complaint.
Where the client has suffered a financial loss due to the HMRC mistake or delay, you can seek a refund of those amounts. In addition, compensation may be sought for worry and distress, where the client was aware of the HMRC error.
There is not a time limit for making a complaint, although HMRC indicate that they would expect a taxpayer to let them know about poor service “as soon as possible”.
HMRC operates a two-tier structure for its complaints process. Initially, the complaint is subject to a ‘first tier’ review. HMRC do not provide a timetable for their response to a complaint, but they should respond quickly. Advisers should consider chasing HMRC if they have not received a response within four weeks. A further delay in dealing with a complaint may form the basis for a separate complaint or add to any claim for compensation.
If the client is not happy with the substantive response from HMRC to the First-Tier review, the case can be escalated to a tier two complaint. The case is reviewed by a different officer, who will report their findings. The original complaint handler’s position may be upheld, or the tier two complaint handler may reach a different decision. The tier two review is the end of the HMRC complaint process. If the client remains unsatisfied with the outcome, they will have recourse to the Adjudicator’s Office, and, potentially, the Parliamentary and Health Service Ombudsman (which is accessed through the client’s MP). The Adjudicator’s Office will only consider the complaint after it has been subject to a first and second tier review by HMRC.
HMRC state, on the gov.uk website, that they “will not treat you differently because you’ve made a complaint”, and “They will handle your complaint fairly, confidentially and investigate the issues thoroughly”. It is something that needs to be kept under review although the author has personally not seen any cases where there have been any consequences of having made a complaint.
The complaints process should not be used as a reason to withhold payment from HMRC, where there is tax due. Advisers should ensure that their client continues to make any payments that are due, subject to the appeals and postponement process, to avoid the imposition of interest or penalties.
Is it worth complaining?
Each case must be considered on its merits, taking into account what has gone wrong, the level of culpability, the impact on the client, and the client’s wishes. The adviser may consider that the matter can be resolved by liaising with the enquiry officer, without recourse to the formal complaints procedure.
In the case referred to above where the officer seemed to be struggling with the technical arguments, the matter was resolved by threatening to put a formal complaint. This was not a random threat but a comment outlining that we felt that he was ignoring our arguments without reasons being provided and that unless we got a substantive response, we would consider making a formal complaint. This had the desired outcome for the client.
When advising my clients, the starting point may be that it is usually better to finalise the enquiry, or resolve the dispute, before making a formal complaint. Making a complaint can be a distraction, and cause delay, or additional delay, while the matter is being investigated by HMRC. A recent discussion with another advisor highlighted this point. They are a specialist in dealing with R&D claims and had currently made a formal complaint against an officer who had opened an enquiry into one of their clients and was behaving (in their mind) inappropriately. When they had a meeting to discuss the complaint, they were astonished to find that the technical aspects of the claim were not being considered at all but rather the meeting focussed on the conduct of the enquiry. This is not a mechanism to get the technical arguments considered by another person. The only way for that to happen is to get an appealable decision (such as a closure notice or an assessment) which can be referred to internal review or Alternative Dispute Resolution. Of course, many advisors do not want the finality of an appealable decision as this makes it appear to their clients that they have not dealt with the case adequately.
There will, however, always be exceptions, and advisers will need to form a view taking into account the circumstances of the case. If it is necessary to make a complaint while the enquiry is ongoing then the comments made above about supplying all the facts, supporting documents and relevant claims for compensation should also be followed.
Advisers should be aware that the client may decide not to pursue a complaint if this is delayed until there is a resolution to the technical arguments. When the enquiry is finalised, the client may be happy that a conclusion has been reached, and not instigate a complaint, particularly where there has not been a significant loss.
At the end of the day, the decision to make a complaint (and the timing of this) should probably always be made by the client. A frustrated client may need to be ‘talked down’ from complaining in some cases where it is unlikely to achieve anything since this will increase the frustration. However, clients should also not be encouraged to complain in cases where the advisor is the one who is annoyed at what has happened. Although given the current levels of customer service from HMRC, it is very easy to find yourself annoyed!
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