Tax Credits: HMRC complaints
This section of the website explains how to make a complaint to HMRC.
Where HMRC has handled a case badly or if a dispute has failed, there is a complaints procedure which also provides for payment of compensation if a claimant has lost out financially, or suffered anxiety or distress, as a result of HMRC's error or delay.
HMRC's complaints procedure was originally set out in a code of practice, COP1. There were numerous revisions to COP 1 over the years, each one giving less information than its predecessor. It was then replaced by a factsheet but the current information is simply presented on the GOV.UK website.
Points to note about this procedure are:
- To make a complaint, write or speak to the person or office you (or the claimant) have been dealing with, putting 'complaint' at the top of your letter if you are writing. You can also complain by telephone. You are asked to tell HMRC as much as you can about your complaint, including what went wrong, when it happened, who you dealt with, and how you would like it settled. This is called the ‘Tier 1 Complaint’
- If the response to the tier 1 complaint is unsatisfactory, ask HMRC to look at your complaint again. It will be referred to a different officer who has not been involved, who will take a fresh look at it and how HMRC have handled it, then give you a final decision. This second review is often called a 'Tier 2 complaint'.
- If you are not happy with the response to the tier 2 complaint, you can ask the Adjudicator to look into your complaint.
- If you are unhappy with the Adjudicator’s decision, you can also ask your MP to refer the matter to the Parliamentary Ombudsman.
As noted above, the complaint should be made to the person or office the claimant has been dealing with. For example, if the complaint is about the handling of a compliance investigation this might be the compliance officer.
Alternatively, you can write to HMRC’s complaints team who will provide a written response to the complaint:
HMRC Tax Credits
One very important point about the complaints process is that HMRC policy is not to suspend recovery whilst the complaint is being dealt with even if it goes to the Adjudicator or Ombudsman. Advisers should speak to DMB to see if they are willing to suspend, in some cases they might agree, in others they may stick to their official policy. In such cases, advisers must ensure that the claimant engages with DMB so as to avoid the case continuing along the recovery route and potentially reaching county court.
HMRC’s Charter was introduced in 2009 and has statutory backing in the Finance Act 2009. Although it does not replace existing rights and remedies, it is a useful addition especially in the complaints process. The Charter was reviewed in November 2020 and is available on the GOV.UK website.
When sending a complaint to HMRC, it can help to refer to the Charter, specifically identifying where HMRC have not met their obligations.
If the claimant has suffered financial loss, or particular anxiety or distress, they should consider claiming compensation.
On financial loss, the GOV.UK website says that HMRC will consider refunding any reasonable costs claimants have had to pay as a direct result of HMRC's mistakes or unreasonable delay. It lists, as examples, postage, phone calls, and professional fees and mentions that claimants should keep receipts for items they are seeking refunds for. The former COP1 also listed under this head travelling expenses and financial charges. The claimant should keep evidence of all such costs (receipts etc) and show them to HMRC when asked.On payments for worry and distress, the former COP1 added:
‘These payments, which are not intended to put a value on the distress you have suffered, will usually range from £25 to £500’.
'If we handle your complaint badly or take an unreasonable time to deal with it, we may pay you compensation, on top of any reasonable costs, to reflect this. These payments will usually range from £25 to £500.'
These paragraphs no longer appears but there is no reason why poor complaints handling cannot be one of the factors to be considered in determining the amount of compensation for worry and distress.
The claimant does not have to accept what HMRC offer. Look at the case studies in the Adjudicator's Annual Reports to get an idea of the kind of sums that are agreed after reference to the Adjudicator's office.
Last reviewed/updated 28 April 2022