Parliamentary Ombudsman - Complaints, Complaints, Complaints

The Ombudsman received 206 complaints against the Inland Revenue, including complaints against the Valuation Office Agency and the National Insurance Contributions Office. This is less than in 2000-01, when the Ombudsman received 214 complaints.

As ever, a number of complaints concerned delay. In one case, the Revenue had taken five-and-a-half years to deal with a complicated capital gains tax matter. After the intervention of the Ombudsman, the Revenue accepted that this amount of time was unjustified, so apologised, waived £42,000 of interest, offered to make a consolatory payment, and to pay reasonable relevant costs.

Several other complaints concerned perceived faults in the Revenue's dealing with agents and other third parties.

One such case, for instance, concerned a certified accountant who had told the Revenue that his firm was relocating. The Revenue updated some records for his clients' tax records, but forgot to tell him that clients who were employers would need to be updated by individual tax offices. As a result, some correspondence went astray and, although the Revenue tried to sort out the problem, some of the clients received penalty warning notices, even though their pay-as-you-earn end of year returns had been submitted correctly. Even the letter of apology to the accountant showed an incorrect address. Following the Ombudsman's intervention, the Revenue agreed that it had caused the accountant extra work for which he could not reasonably charge his clients. It therefore met his additional costs in full.

Revenue investigations also cause complaints to be made to the Ombudsman, which is not surprising since, as Sir Michael says, investigations 'will be particularly stressful for the subject and may cause him to spend money on professional advice' even when it turns out that not all the Revenue's concerns have substance.

An example concerned an investigation into a family business. The investigation was started in 1994, and later in that year was taken over by the Special Compliance Office with a view to criminal prosecution. However, the case was brought before the courts in 1999, and was dismissed because of the Revenue's delay. Subsequently, a civil settlement was negotiated with the Special Compliance Office which, according to the taxpayer, proved that matters were considerably less serious than originally contended.

The Ombudsman could not question the right of the Revenue to prosecute the taxpayer, but he did consider that the case contained administrative faults and that some of the delay was avoidable. Overall, however, there was no mishandling, and the local tax office had not been wrong to open the investigation. The 'broad approach' had not gone against the existing Revenue guidance, but had been 'at odds with the Revenue's relevant code of practice'. This may have contributed to difficulties in dealing with the case. The Revenue apologised and made an ex gratia payment of £2,000 in recognition of its fault and mishandling.

The Revenue revised its code of practice on how it handles complaints and, although the Ombudsman is not bound by that code, he welcomed the changes and the increased flexibility it offered.

In 2001-02, the Ombudsman reported that he received 42 complaints against Customs, compared with 24 in the previous year. Some of the increase related to complaints from travellers about Customs' actions against suspected smugglers. While the Ombudsman was unable to intervene in this respect, he was keen for travellers to have clear information and that Customs should take into account 'humanitarian considerations' when they take vehicles.

Perhaps the advantage of the Ombudsman, from the point of view of taxpayers, is that he is entirely independent. The Adjudicator is always promoted as independent, but it is understandable that taxpayers may feel that this is not the case, as her office is partly staffed by Revenue employees on secondment. However, complainants who are not happy with the outcome of a complaint dealt with by the Adjudicator have recourse to the Parliamentary Ombudsman, whereas the Adjudicator cannot accept complaints which have been dealt with by the Ombudsman.

Finally, the Ombudsman says in his report that it will be his last annual report as Parliamentary Ombudsman. He also mentioned the Government's announcement in July 2001 that it intended to replace the existing public sector ombudsman arrangements in England with a unified ombudsman body for central and local government and the National Health Service. While welcoming potential changes, Sir Michael regretted that there was as yet 'no sign of the promised proposals'. However, in the meantime he wished his successor well, and paid tribute to the work of his staff.

The Ombudsman can be contacted at: