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KEY POINTS
- Backlog cleared.
- 14,861 enquiries received in 2010/11.
- Problems with tax credits form the bulk of complaints.
- All recommendations accepted.
- Departments must communicate more effectively.
It has been a good year for the Adjudicator’s Office. For a start, the annual report has been published at the normal time, instead of several weeks late as was the case in the past two years.
More importantly, the Adjudicator, Judy Clements, announced in her foreword that the office has finally completed its recovery plan and cleared the backlog of cases.
In total, the Adjudicator handled 14,861 enquiries in 2010/11 and resolved 2,284 complaints, which is 24% more than were cleared in 2009/10. At 31 March 2010, 2,041 cases were awaiting investigation, while at 31 March 2011 the number outstanding stood at 992.
Ms Clements says that ‘currently, we have the lowest number of cases on hand since 2005’.
Acknowledging that everyone at the Adjudicator’s Office has contributed to this success, she thanks all the staff ‘who worked painstakingly under sustained pressure to ensure their targets were met’.
As well as dealing with complaints, the Adjudicator has, over 2010/11, tried to learn more about other organisations which help taxpayers.
In the autumn, she hosted a round table seminar which had representatives from Tax Help for Older People and the Low Incomes Tax Reform Group. In addition, two members of staff shadowed the work of TaxAid, where they saw how many members of the public have ‘a limited understanding and experience’ coping with their tax affairs.
Ms Clements mentions that, during the year, the senior team has developed the way cases are handled to make the process more transparent to complainants.
She explains that the team identified the shared report process already working with HMRC Tax Credits as a good practice model.
In essence this entails ‘sharing a report of known facts about a complaint with customers at an early stage and offering them the opportunity to comment’.
She says early involvement ‘is much appreciated by customers and reduces the need for lengthy exchanges’, and notes that ‘other business areas within HMRC have now agreed to pilot this model’.
The aims for the office over the coming year are ‘to consolidate performance improvements, refresh quality and better understand customers’ experiences of complaints handling’, says Ms Clements, adding that she also intends to ‘drive down the volume of cases on hand’.
Now that she can offer ‘real-time feedback’ to the departments served by the Adjudicator, she hopes service can be improved.
Two faces of HMRC
The number of complaints arising from HMRC is substantial, as Outcome of investigations shows. This is because of the large amount of complaints about the department’s handling of tax credits. In that table, 1,509 of the total number of complaints resolved related to tax credits.
As the report points out, 62% of cases received were about tax credits (down from 67% in 2009/10), and most of them concerned HMRC’s refusal to write off overpayments. Part of the problem is the lack of information offered to claimants by the department and this is something that the Adjudicator has asked it to address.
The report includes some case studies highlighting various problems encountered by claimants. For example, Mr and Mrs V gave an incorrect income figure which resulted in an overpayment of credits. The correct income figure was not notified until the time of the annual declaration.
The reason for this was that Mr V was a serving officer based overseas and said he took responsibility for financial matters. As he was not in the UK, he had been unable to check the details in the award notices, and felt that the overpayment should be written off.
The couple subsequently stopped claiming tax credits because of disillusionment with the system.
However, they later had a meeting with the tax credit office (TCO) and their MP, where the office agreed to pay the amount that Mr and Mrs V would have been entitled to, had they submitted the relevant claims. This was not in line with the TCO guidance.
The outcome of the complaint about the overpaid credits to the Adjudicator was not successful on the basis that each partner was jointly responsible for checking the information submitted. However, the Adjudicator was ‘pleased’ that the TCO had used its discretion to resolve matters.
Another case study saw a successful outcome for the complainant. Miss H and her partner separated during the renewal period, which led to an overpayment.
The tax credit office did not process the annual declaration which they received at the time of the change in circumstances and failed to send out individual declarations.
This meant the claim was shown as not renewed and Miss H and Mr M had been overpaid all of the provisional payments received on their joint award.
Although the office agreed to write off the part of the overpayment that arose from its mistakes, it refused to write off the rest of the overpayment because it had not received income details from both claimants.
Miss H explained that she was unable to influence Mr M to provide details of his income and that contact with him could expose her to danger as he was violent. She gave evidence of court proceedings to support this, so the Adjudicator asked the TCO to consider exceptional circumstances. This it did, and wrote off the remaining overpayment.
As a result of this case, the TCO reminded its staff to consider exceptional circumstances when applicable.
Tax matters
Turning to the other face of HMRC, as in past years, most complaints revolved around extra-statutory concession (ESC) A19 ‘Giving up tax where there are Revenue delays using information’ usually in relation to taxpayers who have more than one source of income.
A case study in the report discusses a complaint by Mrs K who received an occupational pension. HMRC closed the relevant record and an underpayment of tax built up over four years. The Revenue accepted its mistake and considered the matter under ESC A19.
For a claim under the concession to succeed, two conditions have to be met: the department failed to make timely use of information and a reasonable belief test.
HMRC decided that Mrs K should have realised that her tax code was wrong, therefore she failed the reasonable belief test.
The Adjudicator suggested that the department should reconsider the reasonable belief test and, after doing so, it cancelled the underpayment and made a payment for poor complaint handling.
The example demonstrates that HMRC often expect too much of taxpayers when it comes to understanding their tax affairs. Ms Clements notes that the case studies also show that HMRC often fail to establish the relevant facts before coming to a conclusion.
There can be a lack of communication in the department, with it focusing on too narrow an aspect of a case.
The Adjudicator has also found that HMRC sometimes do not adhere to their own internal guidance. She therefore has regular meetings with the department’s complaint teams to ‘promote good practice and encourage lessons to be learned’.
Another case study concerned interest imposed on assessments. The complainant, Mr X, referred to a ‘catalogue of errors on HMRC’s part’, saying they had taken too long to deal with them. He felt bullied and said that the department had not considered his circumstances.
The Adjudicator asked senior members of HMRC to step in, which resulted in the Adjudicator’s Office mediating the case and partially upholding the complaint.
HMRC sent Mr X a full and frank apology, paid him compensation for poor handling, and discharged two potentially invalid assessments.
The department’s mishandling of a complaint was reflected in a case study where it had wrongly recorded that the taxpayer, Mrs Z, had died. Apart from the distress this caused, it led to her not receiving her state pension.
Before the complaint reached the Adjudicator, HMRC had paid compensation in recognition of the upset caused. After being asked by the Adjudicator to pay a higher amount of compensation, HMRC did so.
Details of amounts paid by the various departments for worry, distress, poor complaints handling, etc. are shown in the Redress paid table.
Small but important
Complaints about the Valuation Office Agency (VOA) and Insolvency Service are fewer, forming a much smaller proportion of those dealt with by the Adjudicator.
With regard to the VOA, 55% of the cases resolved concerned council tax, and 40% of those were requests for compensation for loss of interest where the agency had reduced a property’s council tax band.
The reports notes that the 2010 non-domestic rating re-valuation for England and Wales had also proved troublesome.
The Adjudicator says her relationship with the VOA is positive, and adds that it is ‘receptive’ to constructive feedback.
For example, after several complaints which indicated that taxpayers were unsure of what was expected of them when it came to rateable value, the VOA is reviewing its codes of practice ‘to define more clearly their expectations of customers and what customers can expect of them’.
Turning to the Insolvency Service, the Adjudicator is quite restricted in what she can investigate with regard to this agency because official receivers are accountable to the courts for most of their actions and only the court can reverse or modify a decision about the administration of an insolvent estate.
Thus, there are relatively few complaints, with only ten new cases received in 2010/11; however, they show recurring themes. These include a failure to investigate perceived misconduct when brought to the department’s attention, concern over how the official receiver deals with assets, and delays in dealing with complainants’ letters.
Building on success
The Adjudicator serves an important role in helping ordinary, usually unrepresented, taxpayers sort out their problems with HMRC. If they are not satisfied with the outcome of an investigation, the complainant is free to take his grievance to the Parliamentary Ombudsman.
In the past, the time that it has taken for the Adjudicator to deal with individual complaints has been a source of frustration; because the office is now up to date with cases, this does help to alleviate this issue.
The organisations continue to learn from the Adjudicator, improving their complaints handling processes.
An HMRC spokesman said:
‘We welcome the Adjudicator’s report as it highlights our progress in handling customer complaints and it recognises the efforts we are making to improve our services. We take complaints very seriously; we want people to be able to tell us when we make mistakes and our service falls short. Complaints not only allow us to put things right for the individual but also tell us where we need to learn lessons and improve our services for all our customers [sic].’
The Adjudicator is not all-powerful: she cannot deal with complaints arising from technical tax or legal matters, nor with policy issues.
Areas she can deal with are, perhaps, the more human elements, for example, poor handling of complaints, unreasonable delays, bad advice, and errors. Advisers, as well as taxpayers, may find her help makes the difference.
