HMRC paid £1.7m last year* to compensate taxpayers for mistakes it had made, shows data provided to UHY Hacker Young, the national accountancy group.
Those compensation payments include “ex-gratia” payments of £506,245 where HMRC argues that it does not have a legal obligation to make a compensation payment. However, in total that only equates to approximately £106 per complaint that HMRC agrees is valid**.
The payments were made in response to the 80,000 complaints that HMRC receives per year. Approximately 20% of those complaints are viewed by HMRC as being valid either in full or in part.
Neela Chauhan, Partner, of UHY Hacker Young explains that complaints to HMRC cover issues such as:
- HMRC giving incorrect advice that leads to the taxpayer getting their tax wrong
- Such serious delays in responding to a taxpayer that the delay has material impact on a business or an individual
- HMRC misinterpreting the rules to the detriment of a taxpayer
- Lengthy delays in issuing a tax refund to an individual or a business
“It is often very hard to get HMRC to admit they are at fault and even harder to get them to make a compensation payment that genuinely reflects the trouble and stress they have put a taxpayer through.”
“If HMRC were forced to pay higher levels of compensation for their mistakes then that could act as a spur to them improving their service levels. That would benefit everyone and even HMRC admits there is plenty of scope for them to improve service levels.”
For example, it still takes HMRC an average of over 13 minutes to answer an inbound phone call. Only 55.5% of taxpayers express satisfaction with HMRC’s call centre responses and approximately 250,000 calls get abandoned, or end with a busy tone or recorded message per month.
Neela Chauhan, Partner, of UHY Hacker Young
*Year end April 2 2026
**Complaint upheld in part or full
