HMRC complaints: A case study and the complaints process

This article was published in Taxation on 18 June 2025.

Within their published Standard for Agents, HMRC set out that they recognise the value of professional agents in helping taxpayers comply with their tax obligations and expect those agents to maintain high standards in order to promote tax compliance. Good service is however a two-way street. In delivering a high-quality service, we are entitled to expect the same from HMRC by return. Where HMRC fall short of those standards we expect, then clients are free to seek redress for any poor service, which can ultimately achieve financial remedy.

Whether you are simply seeking to comply with your responsibilities in relation to tax, or you are subject to a tax investigation, you are entitled to expect HMRC to deal with you competently and without unreasonable delay.

HMRC complaints and service delivery experiences

Service delivery experiences for taxpayers and agents alike are generally a tale of delays to mostly routine tasks like processing refunds and answering calls, to ever increasing instances of enquiries not being competently worked. It does appear from the coal face that HMRC’s customer service levels have not increased dramatically from the 2023/24 National Audit Office report findings that HMRC had continued its decline even though it scored an “all-time low” the previous year.

Dealing with HMRC as an agent, it is fair to say that negative experiences are almost expected, rather than being the exception. For instance, it is now commonplace to hear of loss carry back elections and refunds arising from amended returns taking nine months, or worse, for HMRC to process.

HMRC is at least taking on new compliance and enforcement staff. Within tax dispute resolution circles, we are, however, finding that the current crop of officers are not as conversant with the current HMRC enquiry protocols and guidance as perhaps their predecessors were and, to some extent, we are now having to fill the gaps in their training.

When met with such intransigence or poor service, what are your options? A good first option is simply to complain. It has proven useful for clearing any processing ‘log jam’ in relation to stuck refunds or returns not captured. However, we are increasingly finding that a complaint can certainly help where HMRC may have behaved unreasonably or stepped outside their guidance and protocols in relation to enquiry cases.

The complaints process

An overview of the process for handling complaints is set out in HMRC’s Complaints Handling Guidance manual at CHG315. Specifically, HMRC operate a two-tier complaints handling process:

• Tier one being HMRC’s initial attempt to resolve a complaint that was not resolved at the first point of contact. The first point of contact being the relevant officer concerned, which could be an enquiry officer or perhaps an officer manning one of the many helplines
• Tier two applies where the tier one response is considered unsatisfactory. You can request that the complaint is escalated to tier two and looked at again. HMRC can also escalate a complaint to tier two despite that complaint having been resolved at tier one, if the customer continues to correspond over the matter.

Possible outcomes of a complaint review

Where HMRC review a complaint, the officer comes to one of three conclusions: ‘Fully upheld’ means HMRC agree the main thrust of the complaint; ‘Partially upheld’ means HMRC agree some, but not all of the complaint; and ‘Not upheld’ is where HMRC do not agree any aspect of the complaint.

HMRC’s stated aim is to resolve as many complaints as possible at tier one. Those that are escalated to tier two and still do not get resolved can then be progressed toward the Adjudicator’s Office.  Beyond the Adjudicator, complaints can go to the Parliamentary Ombudsman.

There are strict criteria for escalation beyond tier two to both those respective entities so caution has to be exercised in establishing whether they can in fact handle your specific complaint. Immediate rejection after a great deal of time (and cost) has been expended does not generally go down too well with clients.

Before you rush to complain however, you need to have in mind that HMRC complaints handlers do have limitations binding them as to what can realistically be achieved. The Litigation and Settlements Strategy will often restrict any potential for HMRC to simply “walk away” from tax that is strictly legally due, no matter how poorly the enquiry officer concerned might have approached the matter.

Also, that legally due underpaid tax will attract statutory late payment interest. That said, we have found it possible to vastly reduce statutory interest charges where there has been delay or poor handling by the HMRC officer involved.

The common response within the profession

Bring up the topic of complaints within the profession and the common response is “Oh we don’t bother complaining to HMRC, never gets you anywhere” – something I have heard time and again since leaving HMRC in 2018 and a comment I challenge every time.

A problem with complaints is that the client might have the best grounds for complaint, but if the complaint itself is poorly drafted or is too emotive, or worse still, sent to the wrong person or unit, then this seriously affects any chances of a positive outcome.

Put yourself in the shoes of the recipient, the complaints handler. If you receive a letter strewn with insults or allegations against your work colleague, or the department both of you work for, how would you receive that correspondence and the contents within it? Generally, the reaction is for HMRC to raise their defences and counter the allegations against them.

Setting out your complaint

Firstly, think about what specifically is giving rise to your complaint and have in mind what you intend to achieve by making your complaint.

Take the reader (the complaints officer) through the complaint, set out what you are complaining about in simple terms, then flesh this out with a timeline of actions.

Think about what HMRC said or promised, what wasn’t delivered, and reference the relevant published HMRC Charter aims. For enquiry cases reference the commitments under the more recently published HMRC’s Professional Standards for Compliance, which should apply to all their caseworkers.

Summarise your complaint and what you are seeking to achieve. Drop out any emotive comments, do not make personal comments as regards the officer no matter how poor their conduct, remain respectful and let the complaints handler decide based on the facts and evidence you present. Keep the higher ground – you have been let down, you expected better.

Compensation claims and payments for redress

When resolving a complaint that has been upheld, HMRC should invite a claim for compensation. HMRC will usually offer to make payment in relation to any unnecessary distress, but this is likely to be a relatively small sum. In my early life in HMRC in 1991 these would be in the shape of a bunch of flowers of a book of stamps, nowadays it is a payment of say £50 or so. However, where HMRC agree that professional costs have been wasted or incurred unnecessarily, then this opens the prospect of financial compensation in relation to those additional costs.

Subject access requests (SAR)

Under the UK General Data Protection Regulation taxpayers are entitled to access to the information HMRC holds on them. This can be achieved by lodging a SAR, which can be included with your complaint.

SARs are very useful tools when mounting a complaint. You can ask HMRC directly for their record of actions on an enquiry case, or simply for a copy of the self-assessment (SA) system notes for a client.  Often HMRC will resist, but eventually should relent and supply you with a copy of their notes and actions.

For one of our own clients, the entries within HMRC’s SA system notes clearly demonstrated that the client had indeed sent in a letter at the time when the client had said they did. Despite this HMRC had repeatedly denied receipt. This led to a six-figure tax repayment and compensation for our wasted fees. If the circumstances are right, then always consider lodging a SAR in tandem with your complaint.

A recent case study

As you will no doubt appreciate, we need to respect the confidentiality of our client, so I will only cover the issue in outline. HMRC Wealthy and Mid-Sized Business Compliance (WMBC) launched a discovery enquiry into one of our client’s past SA tax returns by issuing an assessment under s29 TMA 1970 and seeking to recover a claim to EIS relief.

Generally, we have found that officers within WMBC are of the better trained variety and a step up in quality from their compatriots within HMRC’s Individuals and Small Business Compliance (ISBC). During this enquiry however, we found that the HMRC officer advanced what we took to be plainly a nonsense argument.

As part of the process of the EIS claim, our client had re-invested in another EIS Limited Partnership along with many other investors, all of whom were unaware of who their fellow investors were. HMRC found that one of these fellow investors in the next EIS LP was also an investor in the previous EIS investment that our client had also invested in. By this link, HMRC advanced that both were deemed to be ‘associated parties’ within the legislation at Part 5 ICTA 2007 and as such the claim to EIS relief was denied.

Plainly this was nonsense, how could anyone guarantee, when investing blind into an EIS LP and being unaware of who your fellow investors were, that one of those fellow investors hadn’t already invested into another EIS LP of which you were both members?

Despite this situation being impossible to guard against, HMRC would not back down.

Escalation and legal challenge

We even ended up engaging tax counsel and listing the appeal before the tribunal. With Counsel’s input we made the further point that our client and another could not be considered to be ‘in business’ together as they were both simply investors in the LP and had no involvement in the business at all. The legislation governing LP membership prevents members from engaging in business decisions or management.

This was further nonsense on top of the existing nonsense argument, but still HMRC would not back down. If HMRC’s reading of the legislation was right, then it effectively ends all EIS investment activity as there could have been no certainty for investors that they would not similarly be judged to have been in business with other associated parties who happen to be simply unknown fellow investors.

Unbelievably, HMRC went on to issue their Statement of Case, then right after it they withdrew their argument.

How did we help?

From the wider EIS standpoint this was obviously good, for the above reasons. From the client’s perspective, it meant the prospect of months or even years of litigation was gone and a huge assessment vacated.  However, the client was still left with in the region of £20,000 of professional fees, which they had paid over in the process.

We lodged a tier one complaint in relation to HMRC’s pursuit of our client by way of their ill-conceived discovery enquiry and assessment.

We set out the nonsense argument in plain language and in simple terms. We set out the timeline of actions and emphasised where we had attempted to point out where we believed HMRC were incorrect.

We felt this was perhaps a “try-on” from HMRC. Marching up to the top of the First Tier Tribunal hill and seeing if the client would fold on the way there.

We set out where we felt HMRC had fallen short of the standard expected as set out in their aims under both the published Charter and those within the HMRC Professional Standards for Compliance.

We put forward that we believed HMRC made a frivolous enquiry, taking up a plainly nonsense argument all the way to the litigation arena. Our client had no choice in view of the sums involved, but to defend himself.

The outcome

The complaints handler agreed, upholding our complaint and inviting a claim to compensation. HMRC later agreed to refund virtually all of the £20,000 of wasted professional fees and to make a payment for redress on top.

More than the compensation monies and payment for redress, the client just wanted an apology first and foremost. The closing letter from the Director of HMRC WMBC stating “I am sorry we have been unable to provide you and your client with a satisfactory level of service” meant everything to our client.

Conclusion

Having a complaint upheld on all fronts, compensation agreed in relation to the unnecessary professional fees incurred as a result of HMRC wasting all our time, together with a modest redress payment is our aim. Most importantly for the client, however, is often receiving an actual apology from the taxman. This gives closure and is usually their main take away from the experience.

The above outcome was achieved at tier one, but in other instances we have escalated to tier two and enabled clients to obtain long since expired settlement terms they had originally applied for and been wrongly denied, or brought rogue officers into line and settled long standing enquiries on reasonable terms.

From HMRC’s published standpoint, they value complaints and per their guidance at CHG310 they recognise that complaints are important. The guidance states that complaints provide valuable feedback on service delivery, provide an audit trail and can be an early warning of failures. They can also help restore broken relationships and encourage ongoing compliance.

Experience of this published standpoint has been mixed. Some officers do appreciate the benefits and learning points that the complaints process can deliver, whereas others do not appear to value the process at all.

Finally, please don’t tell me that complaints against HMRC are not worth pursuing. I hope the above has clearly demonstrated that if the circumstances merit, complaints are a very worthwhile and vital tool.  Complaints can help defend the rights of taxpayers when HMRC oversteps their protocols or fails to deliver the service levels expected.

A competently considered and drafted complaint can deliver positive results where HMRC have overstepped their guidance or erred in judgement.