Delays In UK Tax Refunds Set To Continue

by Amanda Banks, Tax-News.com, London

04 June 2009

PKF Accountants and business advisers is warning taxpayers waiting for tax refunds that they may have to wait a long time to get their money without any interest being added.

The agency has explained that, although HM Revenue & Customs (HMRC) is about to issue a statement acknowledging the problem, it expects the delays to continue for some time as it battles a backlog of claims and tries to find ways to speed up refunds by automating some of the manual checks.

John Cassidy, Tax Investigations Partner at PKF commented:

“I feel sorry for taxpayers claiming refunds: some are effectively being treated as if they have made false claims, perhaps as a knock on effect of the problems with MP’s expenses.”

Tax refund claims that are selected for manual security checks to ensure that they are not fraudulent are transferred to a new specialist unit in Bristol to investigate further without telling the taxpayer. Confusingly, where a refund is due, messages given in HMRC’s online self-assessment pages often indicate that a repayment has been issued without making any reference to the checking system.

This special checking unit only accepts written communications so, once a case is referred, there is no way to speed up the process or find out why a refund has not been made.

Mr Cassidy continued:

“I do not see the need for this somewhat clandestine operation, with no facility for telephoning HMRC. Obviously HMRC does have to protect the public purse, but it ought to be able to carry out sufficient checks on most businesses very quickly. I’d like to see some statistics on how many refund claims eventually prove to be fraudulent – I expect the number will be miniscule with the loss of revenue too small to justify such delays for honest taxpayers."

“The refund system also contrasts drastically with the tax payments system where the rule is you pay first and HMRC ‘process’ your return automatically with checks made later. HMRC ought to adopt a similar process of ‘repay now - check later’ for taxpayers with a good tax compliance record. This would mean that the vast majority of refunds could be made quickly to help businesses and individuals in these tough times.”

Cassidy concluded:

“The new Business Payment Support service that allows taxpayers to request more time to pay business tax liabilities seems to be operating quickly and efficiently without the need for extensive manual checks before a new payment schedule is agreed.”

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