Tax Refund Delays III

This appeared in the Times on Saturday (see below). It seems that HMRC are delaying a large number of tax repayments (see my earlier articles about tax refund delays for further background on this).

The Times wants people who are experiencing delays with tax repayments to write to them at this email address troubleshooter@thetimes.co.uk, with a view to giving HMRC a well deserved kick.

Might I also suggest that you copy your emails to Dave Hartnett at this address dave.hartnett@hmrc.gsi.gov.uk, in order to focus HMRC's attention on the matter.

"I have received a self-assessment tax statement for the year 2007-08, showing that I was due a £4,000 rebate in January. Three months later, I have yet to receive it.

On ringing the tax office, I was told that 10 per cent of all tax returns are called in at random for checking and that mine is one of them. I was also told that since I had now chased it, it would move up the pile and be dealt with in the next couple of weeks - the implication being that had I not chased, I would never receive the money. That was a month ago. Further chasing was met with the same answer.

If the tables were turned, I would be fined immediately and charged interest. Is it just me, or is there a lot of this going on at present, given the Government's financial mess? How do I get my money and can I expect interest?

Roland Grant, Middlesex

The Revenue's response was typically unapologetic. It said that it aims to deal with repayments as quickly as possible, that it cannot always prioritise repayments but there is no policy of delaying them, and that checking will take longer at peak times of year. Yawn. Three months to repay £4,000? Come on. The private sector would never get away with it.

You eventually received your cheque while Troubleshooter was investigating your case, but without the interest. Troubleshooter was somewhat confused by this, as the Revenue had confirmed that interest is payable from the date that you paid the tax until the end of the month when the repayment is issued. Normally, at least.

Now that the Bank of England base rate is at the subnormal level of 0.5 per cent, the Revenue has reduced interest payable to an invisible 0 per cent, defending itself thus: 'The rate of interest on overpaid tax reflects the average commercial rate for a return on deposits. No commercial body has the same rates for both paying and charging interest.'

True, except that 0 per cent does not reflect the average commercial rate for a return on deposits, which is 0.66 per cent, according to Moneyfacts. Furthermore, the Revenue began applying 0 per cent from January 27, when the base rate was still 1.5 per cent. It did not fall to 0.5 per cent until March 5. Did it know something we didn't?

The Revenue went on to say that it does not wish to pay too much interest and encourage 'banking' with the tax office. So you are left without compensation for the interest that your £4,000 could have earned in a savings account, which is unfair. Clearly, the accusation of unfairness does not worry the Revenue, as no compensation has arrived yet. What is needed is people power. Anyone who has not had interest paid on their rebates should contact Troubleshooter."

Tax does have to be taxing.

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