Lee Sharpe is concerned that HMRC is exploring new ways to hold on to your money for longer.
The good old days
I recall a case (millennia ago) where a return was submitted eye-wateringly late, but when I then rang the local tax office, they promptly located the return, then called back that afternoon, as promised, to confirm the return had been processed and a payable order would be put in the evening’s post – first class, naturally. (Remember: no penalties in those days when there was no tax liability, and legend has it that clients would even store up several years’ returns to do all in one go).
This was back in the days when the Inland Revenue distinguished money that was due to the Crown from that which belonged to the taxpayer.
Roughly a decade later, I rang HMRC’s helpline to chase up a substantial credit still outstanding roughly six weeks since the return had been filed online. After playing the interminable options: hold and listen-to-us-spend-several-minutes-telling-you-why-you-should-really-try-to-solve-this-issue-online-by-looking-through-our-website-rather-than-distracting-us-with-your-trivial-problems game, I finally got through to an HMRC officer – sorry – call-handler.
After explaining the position, a long silence ensued. Eventually, HMRC’s finest asked, “What do you want me to do about it?” Just for the record, the return did include a repayment request. And no, I would not be writing in to request a repayment (again); thank you very much.
More recently, it is taking a lot of time trying to speak to anyone at HMRC because they are all so frightfully busy after the pandemic (unlike the rest of us). So, one is reduced to trying where possible to transact with HMRC only online.
The wrong kind of repayment claim?
There is a particular issue that has been gaining more attention in the tax press and beyond over the last few months. Many thousands of repayment claims have been outstanding for long periods, often several months. It appears that over the past few years, HMRC has managed to become quite ‘doubleplusungood’ at dealing with repayment claims. Apparently, HMRC is more prone to smell a ‘wrong’un’ and divert a claim for “enhanced security checks”.
Possible fraud?
HMRC is concerned about organised attacks on the self-assessment system. Of course, such attacks may in some respects be easier now that everything is online, and repayments are usually made automatically to bank accounts. However, this is not something that taxpayers asked for but that HMRC has been actively trying to nudge taxpayers (and agents) to do for a good number of years.
HMRC apparently has special letters designed to weed out genuine taxpayer claims from those that may be fraudulent. (Notably, such letters are not copied to the taxpayer’s advisers). They ask for documentary evidence of the taxpayer’s identity to be sent by post(!) to HMRC, alongside further evidence in support of the claim. So, it seems the claimant may have to weigh up the risks of possible identity theft if that paperwork goes astray, against getting their tax back. And if the taxpayer does not reply within roughly 30 days, then HMRC may simply shut down the taxpayer record.
HMRC has said these measures are not taken under the enquiry regime for self-assessment, TMA 1970 s 9A but in the exercise of “ancillary powers”.
Practical tip
Worryingly, we appear now to be almost at the point where HMRC’s approach is “it’s our money until you can prove it’s not”. HMRC does not seem so concerned about the taxpayer or their security, however. While each case should be considered on its own merits, I have in some cases recommended writing to HMRC to demand they actually open an enquiry – in accordance with their published guidance – to resolve the delay.
