“Well, here we go yet again … another sorry tale of HMRC institutional incompetence and inefficiency”

The judgment of Justice Nicholas Wikely in the Upper Tribunal in VO v HMRC (TC) [2017] speaks for itself:

“Well, here we go yet again.  I used the phrase “Well, here we go again” with a sense of frustration, bordering on despair, to open my decision in NI v HMRC [2015] UKUT 160 (AAC), a case in which I criticised Her Majesty Revenue and Customs (HMRC) for both its decision-making processes and its conduct of appeals in relation to tax credits claims. .. So, yes, in short this is yet another sorry tale of HMRC institutional incompetence and inefficiency which could well have led to injustice, were it not for the persistence of the Appellant.”

But of course, it did lead to injustice: the denial of entitlement and redress for five years. The judge explained the case as follows:

The HMRC written response to the Appellant’s appeal made the case look very
straightforward. In a nutshell, the Appellant had failed to reply to a request from HMRC to provide evidence of her entitlement to tax credits. She was therefore no longer entitled to tax credits for the relevant tax year and was liable for a substantial overpayment. So, according to HMRC, it was an open and shut case. End of story. … In her notice of appeal, the Appellant stated that “as I previously explained, I forwarded all the information required from me and to my surprise you never received the documents” (emphasis added). I interpose here that I have underlined the phrase “as I previously explained” as this statement alone should have rung alarm bells for the FTT. This is because there was nothing at all in the HMRC evidence provided with the appeal response to suggest that the Appellant had made any contact with HMRC before her notice of appeal … In the parallel universe that is tax credits adjudication, the file does not actually include something as elementary or fundamental as the actual decision notice. As HMRC’s original response to the FTT appeal explained, the HMRC computer cannot provide a copy of a decision notice – only the claimant can do that. So, in a classic Orwellian doublespeak, the response continues: “HMRC has not omitted to include the decision notices from the bundle; it is simply unable to provide copies”. How are we supposed to respond to this? “Oh well, that’s alright then.” Who designed this computer system? Did anyone think to check it was compatible with basic tenets of good public administration, let alone the principles of administrative justice?

He warns first-tier tribunals not to take HMRC’s statements on trust.

The basic principles of administrative justice include the right to know what the argument is against you, and the right to have a hearing. The same disregard for citizens’ rights, of course, is found in decisions about sanctions, where penalties are frequently imposed before the claimant has any opportunity to object.

HMRC does more work of national importance

All HMRC Enquiry Centres are now closedHMRC has been accused at times of being less than vigorous in its pursuit of the money that is due to it, so thanks to the Daily Record for alerting us to the revitalised current priorities of a service that hardly ever makes a mistake.  Debbie Balandis, from Glasgow, has had her benefit stopped while being asked to prove that she is not living as man and wife with Martin McColl, given a series of payments the service had identified. Martin McColl is the trading name of R S McColl, well-kent for providing newsagents and local shops throughout Scotland.

HMRC is not proposing to leave matters there, and it seems there are now further accusations of liaisons with men.  That accusation would be self-defeating, because there is nothing in benefit regulations to prevent it.   Overpayments are liable to occur either where a person has a non-dependant living in their household, or where two people are living together as man and wife.   Neither of those appears to be relevant in this case.

It does seem that Ms Balandis has done something to offend someone, and in our current system of secret justice and lettres de cachet, that is enough to make the heavens fall.  To identify the payments, HMRC would have needed to gain access to Ms Balandis’s record of financial transactions  They have  managed to make time for this important work by some reallocation of priorities, such as closing their offices to the public.  If HMRC is girded up to challenge Glaswegian mothers, can the multi-national corporations be far behind?

HMRC make hardly any mistakes

I was looking up some figures on benefit expenditure, for a paper I’m giving in a few days, when I came across this  little graph from a parliamentary briefing.

fraud and error HMRC

The figures in the bottom half  are available in an HMRC paper published last June.  According to Table 5, HMRC made mistakes in the claimant’s favour in 20,000 cases, but it didn’t cost the taxpayer anything; and they made mistakes in their favour in 30,000 cases, saving £10m or about £330 a throw. This is an remarkable record – an incredible achievement, one might say. One wonders why they even bother with official error regulations when they hardly ever get anything wrong.

Further note, October 2015:  While I was trawling through the links on the blog (an unrewarding chore) I found an updated version of the HMRC paper published in June 2015, and I have altered the link to fit the new version.  This still claims that mistakes in the claimants favour cost nothing, but the estimate of £10m in HMRC’s favour is now to be divided between 90,000 people rather than 30,000.


Attacking HMRC on a range of issues, a Times editorial comments: “Tax Credits have repeatedly been overpaid because changes in individual circumstances occur too frequently for the bureaucracy to keep up.” That’s quite true. But the Universal Credit scheme, contained in the Welfare Reform Bill currently passing through Parliament, relies centrally on the principle that it will be possible to respond to changes in people’s needs as they happen, “in real time”. It is not possible now, and it is not going to happen like that.

The government has sidled away from the promise of a computer system that will cope with everything – no system could be expected to record changes in household circumstances as they happen. What they are currently relying on is the development of a faster PAYE system, which generally depends on income coming from employment. Changes to overpayment rules mean that claimants who are overpaid will have to repay money regardless of whether they could reasonably have known they had been told the wrong thing or were being paid the wrong amount – a situation which the Ombudsman has previously criticised for the instability it creates for low-income households.