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KEY POINTS
- Some 1,714 cases were settled in 2008/09.
- A second Adjudicator's Office opened in Derby.
- Tax credits are still the rgeatest cause for complaint to the Adjudicator.
- Complainants have to wait 11 months.
Somewhat later than usual, the Adjudicator’s annual report has recently been published.
No particular reason has been provided for the delay (it is usually available in July rather than later September). This is the 16th report and the first from Judy Clements OBE, current Adjudicator. She took over from Dame Barbara Mills in April 2009, so the report covers a period before Ms Clements took office.
The office was clearly very busy in the year. The report says that in 2008/09, the assistance team answered 5,085 general enquiry phone calls, up from 4,231 in 2007/08.
Some 4,234 complaints were taken up as assistance cases, i.e. referred back to the relevant organisation on the basis that it has not had the opportunity to consider the complaint already.
The Adjudicator took on 2,174 complaints for investigation (2,017 in the previous year), settling 1,714, which is slightly down from 2007/08 when 1,720 were settled (see 1. Outcome of investigations below).
Thirty-four per cent of complaints were upheld, while 1% were withdrawn and 28% were reconsidered by the department, as against in 2007/08 when 44% were upheld and only 7% were reconsidered by the department.
The statistics about cases where the department reconsidered are noteworthy in that the percentage quadrupled over the year. The Adjudicator explains this as largely being the result of the revised Code of Practice (COP) 26.
Following its introduction in January 2008, the tax credit office (TCO) has considered all cases under the code and, in nearly 500, the new proceedures led it to write off all or most of the disputed overpayment.
The Adjudicator agreed to classify these decisions as ‘department reconsidered’ because they arose due to the revised code, rather than a previously incorrect decision on the part of the TCO.
Long turnaround
A major problem currently for the Adjudicator is the very long turnaround time for completing cases. Ms Clements says that it currently stands at around 50 weeks, while in 2006/07 it was less than 24 weeks.
Ms Clements attributes the increase ‘due to the year beginning with a large backlog caused by disruptions to the office’s workings of tax credit complaints during the previous year’.
Recognising the delay, HMRC have increased the office’s resources, providing an additional office in Derby with extra employees. This allowed the Adjudicator to adopt a recovery plan for 2008/09 aimed at restoring service levels. However, Ms Clements notes that:
‘despite the office having responded well to this challenge, and the successful setting up, to schedule, of the new office in Derby, the backlog of complaints currently stands at just over 2,000 cases.’
She adds that complainants are therefore having to wait about 11 months before their cases are taken up for investigation’. Ms Clements says that her ‘first and foremost priority’ is to restore the office’s customer service standards to acceptable levels.
She will also be working with HMRC to ensure that ‘complaints and disputes concerning tax credits are dealt with by the tax credit office’ speedily and effectively, so that the only complaints that reach the Adjudicator are those that are ‘genuinely irresolvable’.
As in every year, the office conducts independent research to ascertain the level of customer satisfaction with the service received. This has been broadly the same over the last five years, with those satisfied ranging from 65% (2004/05) to 68% (2006/07 and 2008/09).
In addition, the survey showed that 70% of claimants felt that their complaint had been dealt with impartially, compared to 60% last year, and 65% thought their complaint had been investigated thoroughly, compared to 52% in 2007/08.
The chief reason for dissatisfaction lay in the time it took for the Adjudicator to respond to complaints, with 48% citing this a factor this year. Inevitably, satisfaction is linked with outcome, so where the complaint was upheld, 97% of complainants were content, but where it was not upheld, this fell to 45%.
Over to HMRC
As in previous years, the bulk of complaints concerned HMRC, and following the more recent trend, most of them (69%) concerned tax credits. However, the number of complaints about tax credits has been gradually falling since the peak in 2006/07 at 1,771. The number for 2008/09 was 1,451.
In the year, the Adjudicator settled 1,326 tax credit investigations, compared to 1,391 in 2007/08. HMRC were asked to write off the overpayment either wholly or in part in 748 cases.
The reports includes some interesting case studies. For example, Mrs B and her husband made a joint claim for tax credits in 2003. They elected for the money to go to Mrs B but it was paid into a joint account.
After the couple separated in 2005, Mrs B made a single claim. In 2006, she told the TCO that her income for 2004/05 was lower than the figure used. This gave rise to underpayments in her current, single and joint awards. The payment for 2005/06 went to Mrs B, while those for the two other years were paid into the old joint account.
It turned out that Mr B withdrew the money and closed the account. Mrs B asked the TCO to recover the repayments from Mr B, saying that she had told it about her separation, and therefore the money should all have been paid to her new account.
The TCO said that the joint and single awards were separate and that information did not flow from one to the other. It felt it had not made an error as it had acted on the relevant information.
The Adjudicator agreed that no mistake had been made. She said Mr B as joint claimant was equally entitled to the money.
Another case went in favour of the claimants. This concerned an overpayment, which the claimants, Mr and Mrs D had repaid as soon as they could.
The TCO claimed that the overpayment had arisen because the claimants had provided incorrect information. It said that the figures were scanned electronically from the claimants’ form.
Mr D was sure that the figures had been entered incorrectly and obtained a copy of his annual declaration form from HMRC’s data protection unit which he sent to the Adjudicator. This showed that the TCO had made an error and the Adjudicator asked it to reconsider the matter.
As a result it refunded the overpayments that Mr and Mrs D had already repaid and paid compensation of £70 in recognition of the worry and distress caused.
Sharp increase
Other complaints about HMRC mostly concern tax coding and the application of Extra-statutory Concession A19 ‘Giving up tax where there are Revenue delays using information’, investigations, and VAT.
The report notes that there ‘has been a significant increase in the number of non-tax credit complaints’; those relating to ESC A19 ‘Giving up tax where there are Revenue delays using information’, for example, nearly doubled in 2008/09.
The report comments that it is difficult to judge if HMRC have applied their discretion fairly as to whether a taxpayer could reasonably believe that his affairs were in order, but that in considering complaints in this area, the Adjudicator is ‘looking to see whether HMRC have applied the test in accordance with their guidance’.
A case study in the report concerned HMRC’s refusal to give up underpayments of tax in 2003/04 and 2004/05 which had arisen because van benefit had not been included in a PAYE code.
HMRC argued that Mrs F should have expected to receive a revised tax code and contacted them when she did not. On reviewing the case, the Adjudicator said the amounts were small and that HMRC had not sent Mrs F notices of coding for years.
Thus she would not necessarily have realised that HMRC would need to do this. HMRC agreed to give Mrs F the benefit of the doubt, and waived the underpayment.
In another ESC A19 case study, the taxpayer was found to have underpaid tax of £4,000 as a result of receiving duplicate personal allowances on her occupational pension. In this instance, the Adjudicator felt that the taxpayer should have realised something was wrong as the tax codes she had been sent showed quite clearly that she was being allocated more allowances than were due.
Other taxes
Complaints relating to VAT often centre around HMRC providing misleading advice. Not all cases are straightforward, though, as the following case study shows.
Company J was part of a network of businesses. A query arose on VAT, and an assurance officer wrote to the company to confirm an interim arrangement for provisional VAT accounting.
However, a misunderstanding arose over the arrangement, which resulted in the company overclaiming VAT on expenses. The company complained to the Adjudicator that HMRC had misled it over the nature of the interim arrangement and not notified it properly about a subsequent policy decision.
The Adjudicator agreed that the assurance officer’s ruling had misled the company. With regard to the later ruling, the Adjudicator accepted that HMRC had discharged their responsibility by disseminating the information through the computer system used by the company’s network.
The complaint was upheld in part.
Complain away
The Adjudicator’s Office clearly has an important role in dealing with complaints about HMRC, the Valuation Office Agency, and the Office of the Public Guardian.
However, as Ms Clements explains in the report, complainants are expected to have given the relevant department the opportunity to sort out the problem before approaching the Adjudicator.
Furthermore, she cannot deal with anything concerning departmental policy and matters of law. Her focus is rather on administration, e.g. mistakes, unreasonable delays, and misleading advice.
The office continues to be funded by HMRC which, for some, renders its independence questionable, although the Adjudicator is always adamant that the office is impartial. In the report she makes the point that ‘to date, the organisations that we investigate have accepted all of the Adjudicator’s recommendations’.
The only completely independent arbiter for complaints is the Parliamentary and Health Service Ombudsman and, if individuals are not happy with the outcome of a complaint handled by the Adjudicator, they can complain again to the Ombudsman.
The departments tend not trumpet the publication of the report, no doubt unwilling to have the extent of complaints about them widely circulated. However, a spokesman for HMRC said, on a somewhat bullish note:
‘The Adjudicator’s report confirms that the number of complaints about tax credits has fallen again, continuing the downward trend since the peak in 2007.
'While we share the Adjudicator’s disappointment that they have not fallen further, we are encouraged by the effect that the measures we have taken to improve our decision making and complaints handling is having. Our progress is further demonstrated by the significant fall in the proportion of complaints upheld.
‘However we are not complacent and will continue to work closely with the Adjudicator’s Office to bring further improvements where they are needed.’
The large number of tax credit complaints aside, the main priority for the Adjudicator must be to reduce the wait that complainants are currently experiencing.
Having to wait nearly a year for an investigation even to begin, cannot be helpful for taxpayers who are already aggrieved at the way they have been treated by the system.
