Accountants have warned that HM Revenue and Customs (HMRC) are leaving taxpayers struggling for up to twelve weeks or sometimes even longer for tax repayments due to their newly introduced random security checks.
Changes introduced in January mean that taxpayers will not receive any interest on the tax repayments owed to them. Compensation will not be paid for delays on refunds. Conversely, taxpayers who fail to pay tax to HMRC on time can still be charged interest at a rate above the base rate set by the Bank of England. This is in addition to late payment surcharges. HMRC have actually allocated £1bn to tackle tax evasion.
Tax manager, Rob Durrant-Walker from accountants UHY Hacker Young commented, “Delays in repaying tax to which taxpayers are fully entitled are causing enormous financial distress at a time when many people are teetering on the edge of survival. HMRC expects taxpayers to pay their tax on time or face interest and penalty charges.” He continued, “It seems unfair when the boot is on the other foot and HMRC takes months to issue refunds it does not have to compensate taxpayers.”
Durrant-Walker questions whether the £1bn to be spent on dealing with non payment of tax could have been better spent on improving the operation of their system. He also believes that the recession has worsened this problem, “HMRC is not repaying tax unless chased for several months.”