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HMRC have denied allegations that their tax rebates system is experiencing difficulty.
Accountants PFK today claimed that the department was preparing to acknowledge a ‘problem’ that was leading to refunds being held up for lengthy periods – and last month, UHY Hacker Young criticised the taxman’s ‘inadequately resourced’ security checks team for causing repayments to be late.
The Revenue, however, said it would be issuing no such acknowledgement. The department said it was ‘wrong to suggest that long delays are occurring’ and insisted that ‘90% of all tax repayments are made within 30 days’.
A small number of rebates are indeed postponed, said a spokesperson for the department, but only for security reasons, which are ‘part of the process’ to prevent fraudulent behaviour.
He added: ‘In common with commercial financial organisations, we face attempts by individuals and organised criminals to steal from us, and it is therefore crucial that we have robust processes to protect the Exchequer’.
PKF attacked the tax refund claims system for undertaking manual security checks without the taxpayer concerned being made aware.
The company claimed that and the taxman’s online self-assessment pages often indicate that a repayment has been issued to a person who is, in fact, unknowingly being scrutinised by the Repayment Security Team (RST).
The Revenue responded by saying only that it uses ‘an automated risk’-based process to identify which repayments can be immediately released’, and the department added that ‘the majority of repayments selected for manual checks pass… and are released for payment’.
The specifics of the security process remain unknown because HMRC refuse to disclose them 'for obvious security reasons’.
Such secrecy is a cause for frustration, said PKF, because once a case is referred to the RST there is no way to speed up the process or find out why a refund has not been made.
Tax investigations partner John Cassidy said: ‘I do not see the need for this somewhat clandestine operation.
‘I’d like to see some statistics on how many refund claims eventually prove to be fraudulent. I expect the number will be miniscule, with the loss of revenue too small to justify such delays for honest taxpayers.
‘The refund system also contrasts drastically with the tax payments system where the rule is you pay first and HMRC “process” your return automatically, with checks made later.’
