What Makes HMRC So Special?

by Alison Myers-Ward.

What, I wonder, makes HMRC so special that they can be above and beyond the law, and escape the usual duty of care that other professions adhere to?

HMRC's latest COP26 sets out what 'responsibilities' HMRC has to its 'customers' who are claiming tax credits. It must give correct advice to claimants, and record and use information supplied by claimants accurately. When claimants advise of errors, it must correct them promply. It must also update records and claims within 30 days of the claimant telling the Tax Credit Office of a change or an error.

Why, then, is the voluntary user group I work for, Tax Credit Casualties, seeing so many cases where HMRC has failed to fulfil any of its obligations yet refusing to write off the non-fault overpayments of desperate claimants who have struggled for months if not years to convince HMRC that, as claimants, they have only ever been compliant and honest, and spent the money they were awarded in good faith?

HMRC stacks the decks and holds all the aces. Imagine an organisation so powerful that it can track down anyone it wishes to, and turn up unannounced on their doorstep or ring them at work. It can withhold tax rebates as a means of recovering tax credit overpayments. It can tell claimants they cannot appeal against a recovery decision, without any obligation to let on that the claimant does have a right to challenge this - it is just called a dispute. It can act as judge and jury in its own cause, and rule in its own favour. It operates under strict guidance which actually prevents workers who identify an HMRC error to mention that fact to the claimant unless the claimant has themselves picked it up. It can threaten a claimant with court as the very first sign that anything is wrong, despite its masters in government stating that court is only ever used as a last resort. It can take people to court for the recovery of alleged overpayments without their ever having been offered an explanation of the causes of the overpayment, let alone being able to dispute it. At that hearing it can produce a 'Certificate of Debt' which it writes itself, unchecked. This effectively denies the claimant any right of reply and goes against the Human Rights principle of having a fair trial. Once a CCJ is given - which has happened without a claimant even knowing this has occurred - HMRC can use distraint to seize the claimants' belongings. And all this happens not to the fraudulent or deceitful, not to the rich and tax-evading, but to those ordinary lower income families for whom tax credits were intended - according to government propaganda - to be a helping hand.

Report after report has shown that for most of the time the tax credit 'system' has been in operation only a third of all tax credits have been paid correctly. The 97% success rate which has recently been advertised has been discredited by no less a body than the Low Incomes Tax Reform Group, which has also recently picked up on the Tax Credit Casualties' observations of lack of a fair trial, and of excessive delays from HMRC in responding to queries, disputes and complaints. Let's remember that claimants have reported feeling suicidal, being unable to sleep, suffering an increase in health and psychological problems, and other stress-related problems, and any delays in receiving justice only add to their misery, despair and threats to wellbeing. HMRC is also renowned for operating on two speeds - lightening-pace for recovery and court action, and snails pace for explanations and investigations. We, as claimants, are caught between a rock and a hard place. If the financial costs do not crucify us, the mental anguish undoubtedly will.

This was Gordon Brown's 'Money with your name on it'. It was intended to be a means of lifting lower income families from poverty, and helping middle income families towards a more secure future, in recognition of people's hard work in those jobs which traditionally do not incur huge salaries - often public service industries which serve and protect everybody. To deliver on its promises it needed to be accurately and fairly administered by those up to the task, with full public accountability and robust quality control, dispute and complaints mechanism should anything go wrong. It didn't need to be entrusted to bungling bureaucrats who could lose the data of 25 million families one winter afternoon, and whose track record is so abysmal that one chartered accountant - Ken Frost - has devoted his own blog to it. Full accountability should surely have been a necessity rather than a complete afterthought.

Claimants can win their cases, and provided the victim has not been browbeaten into believing it their fault, and with a little help from the Tax Credit Casualties, welfare organisations, a specialist adviser, a solicitor, MP and/or journalist, and with a bit of dogged determination, they invariably do. Armed with details of their claim - which HMRC must provide if a Subject Access Request Notification is received (a letter requesting all documents and a CD of all recorded phone calls to HMRC advisers) - and the newest COP26, it is completely possible to prove their innocence of any blame and receive - eventually - a write-off. Yet HMRC also have the right - under tax law - to hold back any evidence which gives an advantage to the claimant and results in non-recovery of the overpayment. This is allowed to happen because unrecovered overpayments have the same status as unpaid taxation, and the current law is an ass.

The Tax Credit Casualties commonly see situations where claimants are being threatened with court for recovery of an overpayment which only arose because HMRC failed to act on a specific telephone call. HMRC claims this call was never made. The claimant vividly recalls making just such a call, often with dates, times, an adviser's name, and a witness in the house. Yet if that call is not traced by HMRC, or if HMRC maintains there is no record of it, as far as HMRC is concerned, it never happened.

I am not the Tax Credit Casualties' trained caseworker, nor one of those claimant-sympathetic HMRC workers who tries to help out with advice and pointers, but even so, as a campaigner, I get to hear of a lot of HMRC atrocities. Promises were made by this government that recovery would never be pursued in the case of a person having serious health issues and a very limited ability to improve their low income - but I can think of at least six cases when this just hasn't applied. I know someone who has just had their overpayment written off after five court appearances whilst HMRC tried to get its act together, and failed dismally. They wrote off quietly, without fanfare, apology or compensation. They would. I know of someone who was written to, saying she owed nothing, only to have her case suddenly and dramatically reopened with an HMRC official cold-calling and demanding £2500 back!

How can HMRC treat us like this? It is not as though Brown and his government know nothing about the problems, as we have all been telling them for years. It is through a lack of will and commitment rather than through a lack of knowledge.

HMRC is above the law. What makes HMRC so special? Perhaps Gordon Brown can tell us?

www.TaxCC.org