HM Revenue and Customs

3. Mr O complains that HMRC has incorrectly used VAT repayments in 2018/19 to pay for taxes he owed from 2013/14. He tells us he had already paid the 2013/14 taxes. Mr O says he has experienced financial loss because of HMRC’s actions.

4. Mr O wants HMRC to correct its errors and give him the money he believes his business is owed.

5. Mr O’s business has been trading for many years. The business is VAT registered and claims repayments with HMRC annually.

6. In October 2018, Mr O filed a repayment for VAT for the period ending September 2018. He expected this to be around £11,000.

7. HMRC responded to Mr O the following month and said the VAT repayment had been processed, but that part of it had been used to cover outstanding PAYE debt. This meant he would receive about £6,000. HMRC also kept around £40,000 of VAT repayments to settle other unpaid taxes.

8. Mr O disputed this with HMRC. HMRC maintained that there was an outstanding PAYE debt that needed to be paid.

9. Mr O then complained to HMRC. He disputed the outstanding amount owed and said he first raised concerns with the accuracy of HMRC’s records in 2014. He said that in 2015, HMRC’s records showed a zero balance.

10. HMRC told Mr O there was an outstanding amount owed relating to the 2013/14 tax year, and that this was collected from the VAT repayment.

11. Mr O responded the next day and said he had no outstanding debt from 2013/14. He listed all the payments he made to HMRC.

12. In response, HMRC confirmed that all the payments had been received. It added that the amount owed came from a tax determination (a decision made on the amount of tax owed) issued sometime in 2013/14. HMRC spoke to the team that issued the determination and confirmed it was still active.

13. Mr O responded and said the determination had been withdrawn many years ago, and he was told this verbally. He said his business did not owe any money from 2013/14 and that he had overpaid HMRC in previous years.

14. Mr O then complained to the Adjudicator's Office (AO). It decided that the AO could not consider the issues because Mr O had the right to appeal to a tribunal because he was disputing how much tax his business owed.

16. The law says we cannot investigate a complaint if a person has (or had) the option to take legal action unless we consider this is (or was) unreasonable. We do not consider whether legal action would succeed but whether it would be a reasonable option.

17. Mr O complains that HMRC has incorrectly used VAT repayments to his business from 2018/19 to pay taxes it claims he owed from 2013/14.

18. Mr O is disputing how much tax his business owes. HMRC believes there is an outstanding amount owed. Mr O disputes this and believes HMRC owes his business money.

19. In this case, Mr O could appeal the amount of tax he owes at a tribunal. It is unclear whether he can do that now due to time limits, but the option was there at the time of his disputes with HMRC.

20. The only way for Mr O to dispute the amount of tax his business owes is by a legal route. He cannot do this through a complaints process, which is to consider claims of fault, not tax disputes. The only outcome Mr O seeks is for HMRC to correct its errors and pay him the money he believes the business is owed. Essentially, he wants a different decision on his tax affairs. That is not something we can do for him. As such, we have decided not to consider this complaint further. We recognise this will not be the outcome Mr O had hoped for.

1. The Parliamentary and Health Service Ombudsman has carefully considered Mr O’s complaint about HM Revenue and Customs (HMRC). We have decided that he could have taken, and could still take legal action on the matter he has brought to us. We appreciate that this is not the outcome Mr O was hoping for, and we are sorry to hear of the distress he experienced.

2. Mr O is disputing how much tax his business owes. This is something that should be challenged through the appropriate legal channels.