Tax & Accounting News

Tax Refund Problems Persist

21/08/2009

Here at Harris Lipman, we are still hearing from many clients who are continuing to experience delays in receiving tax refunds from HM Revenue and Customs (HMRC), and judging by the recently media attention the issue has received, we are not alone.

The situation appears to have been made worse by a system at HMRC which sees repayments which are marked on a client’s file as having been issued, being ‘blocked’ further down the line. This problem arises when a previously-approved refund is selected to go through a more stringent security check, which seems to be happening more frequently, and taking longer, at the moment.

If a refund has been ‘issued’ but not actually received after a wait of around four weeks, the taxpayer should call HMRC on the number shown on their statement of account and ask when they can expect the refund. If possible, the caller should attempt to get a fixed date – even if it is several more weeks off – rather than continually calling to be told the refund will be issued ‘soon’.

It is also worth bearing in mind that HMRC is unlikely to issue a refund to anyone who is due to pay more tax in the next 30 to 45 days, and will instead hold the refund to set against the liability.

A recent poll from the Institute of Chartered Accountants in England and Wales (ICAEW) found that six out of ten tax advisers said they had spent more time and money dealing with HMRC service problems over the past year than in previous years. It blames cost-cutting at HMRC, which resulted in the closure of local offices and the loss of experienced staff, together with increased security checks for the delays.

The Independent Certified Practicing Accountants Group (ICPA), which represents around 600 accountants, has also said refunds that should be processed within days are taking months to go through – even though HMRC had been encouraging accountants to promote self-assessment on the grounds it would provide faster refunds.

A new IT system at HMRC, which creates a single record of every individual’s tax and NI information, may speed things up in the long-term, but is likely to result in more delays over the next few months, as staff become acquainted with it.

There are a number of steps taxpayers can take to try and ensure speedier refunds in future. Firstly, they should always complete the section headed ‘If you have paid too much tax’ even if they are not due a refund, because if the section is left blank, HMRC may put a ‘no repayment’ flag on the account, which can be carried forward to future years. Secondly, the taxpayer should provide HMRC with their bank account details, meaning the money can be refunded directly, which is usually quicker. Finally, self-assessment tax returns completed online are processed much more quickly than those sent in on paper.

For more information or advice please contact us.

 

Print page