Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Accepted
HMRC identified seven taxpayer overcharges totalling £32 million, mainly impacting small businesses.
Conclusion
HMRC’s 2021–22 testing also found seven cases where taxpayers had been overcharged following the completion of a compliance enquiry, by a total of £32 million. Almost of all of this was a single large overcharge, which HMRC identified before any payment was taken.34 However, most of the smaller overcharges were for individuals or small businesses, who might therefore have struggled to pay had HMRC not identified the error and corrected the position.35 HMRC told us that it has controls in place to prevent over-recording of yield, and that its testing has found a slight improvement in the quality of its casework in the past year. However, it acknowledged that the seven overcharges it identified was too many.36
Government Response Summary
The government agrees with the observation, stating existing controls are in place to ensure accurate tax positions, including quality assurance, appeal processes, and complaint mechanisms, with a commitment to pay interest on overpayments by March 2024.
Government Response
Accepted
HM Government
Accepted
5.4 The government agrees with the Committee’s recommendation. Target implementation date: March 2024 5.5 HMRC carefully considers the relevant information available and will always aim to work with the customer to identify their correct tax position. Any changes in liability are calculated and quality assured. This quality assurance can include manager/technical specialist reviews and/or spot-checks to prevent and correct under/ overcharging. 5.6 Tax decisions can be appealed and when a compliance check is settled HMRC writes to taxpayers to explain any change in liability and the appeal process. When taxpayers appeal, they can also ask for a review of the case by HMRC before it proceeds to the Tax Tribunal. Reviews are undertaken by someone independent of the original decision maker. 5.7 Taxpayers can appoint a representative to act on their behalf. Where needed, HMRC will also provide extra support in helping them meet their compliance obligations. 5.8 Where taxpayers feel that HMRC has not met the standards of the HMRC Charter they can make a complaint. HMRC will reimburse reasonable costs directly caused by any departmental mistake/ delay. Costs can include postage, phone charges and professional fees. If taxpayers are not satisfied with the outcome of their complaint, they can ask for this to be reviewed a second time, by a different person. Taxpayers who disagree with the second complaint review outcome can ask the independent Adjudicator to review their complaint. Taxpayers who disagree with the review outcome can also ask their Member of Parliament to refer the complaint to the Parliamentary and Health Service Ombudsman. 5.9 HMRC will pay interest on overpayments of tax.