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Today’s Adjudicator’s report includes an encouraging commitment to work with HMRC and others to improve complaints procedures. But what will she be saying when 6 million tax calculations are sent out?

What does the Adjudicator do?

The Adjudicator’s Office deals with complaints about poor service from HMRC. The current Adjudicator, Judy Clements OBE, has published her latest report for the year to 31 March 2010.  The majority of cases involving HMRC still concern tax credits – particularly where overpayments have arisen. But the report acknowledges that there have been increasing numbers of tax cases, particularly involving the application of Extra-Statutory Concession A19. 

The report and impact of ‘automatic reconciliations’

The report illustrates, however, that the Adjudicator’s Office is only able to handle relatively small numbers of cases, in the last year responding “to over 16,000 enquiries and investigating and resolving over 1,800 complaints”. This is an improvement on the previous year, following on from a review of working practices to increase efficiency and taking on temporary staff to clear a backlog.

So in the light of recent reports of up to 6 million tax calculations being automatically produced by HMRC’s National Insurance and Pay As You Earn Service (NPS) by the end of the year, what will happen?

If taxpayers feel the concession applies to them (see LITRG’s recent article and further guidance), they should contact HMRC. 

If HMRC refuse to apply the concession, there is no right of appeal in law, but the taxpayer is able to submit a formal complaint to HMRC, then take their case forward to the Adjudicator. If she agrees with HMRC’s decision, the taxpayer can write to their MP who can refer their case to the Parliamentary Ombudsman for consideration.
 
The Adjudicator has been aiming to help improve HMRC’s practice in applying the concession to ensure a more consistent and fair application of it in practice. The report notes:

“Staff should put themselves in the position of each individual taxpayer when considering the ‘reasonable belief’ element of ESC A19. It is only by appreciating the customer’s likely level of understanding of tax, and not making general assumptions, that staff will be able to apply the concession fairly and consistently for all of their customers.”

It goes on to note that:

“Handling a complaint is time-consuming and costly for all concerned; a far better strategy is to get it right first time.”

We hope that HMRC will bear these comments in mind in their response to A19 applications coming out of the automatic reconciliations process, bearing in mind that the numbers involved could increase exponentially – swamping both their own complaints department and, in due course, the Adjudicator’s Office. This will, of course, detract from the latter’s role and mean that there will be setbacks in terms of resolving her other cases – for example in resolving tax credits disputes.

So although this Adjudicator’s report makes for encouraging reading, we are fearful that the next could tell a very different story.