Issue 1 – HMRC’s handling of Mr J’s case in relation to SEISS requirements
19. Mr J’s complaint is he should have received SEISS. He makes several points in relation to that (paragraph 6). He said:
a) he did submit his SATR for 2018/19 before the deadline of 31 January 2020. He said HMRC should have told him on the telephone if the SATR was not showing on HMRC’s system, when he paid his tax at the end of January 2020 b) he did not receive the late filing penalty HMRC said it issued to him in March 2020. He said that if he had done he would have been able to resubmit his SATR before the SEISS deadline on 23 April 2020.
c) by waiving his late filing penalty for the SATR, he considers that HMRC recognised he had submitted his SATR (or thought he had), particularly as he had paid the tax due at the time. Mr J considers HMRC should have taken a practical approach to recognising his unusual circumstances.
Issue 1(a) Submission of SATR in January 2020
20. Mr J considered he submitted his SATR in January 2020 and that HMRC acknowledged this when it waived the late filing penalty. HMRC’s Self Assessment Manual says online SATRs are due by 31 January each year. Further, if the return is not filed by the due date, the system will automatically impose a late filing penalty of £100, usually in February. HMRC said its website issues an automatic acknowledgement to taxpayers who successfully submit their SATR.
21. The Directions for SEISS require a SATR for 2018/19 to have been submitted by 23 April 2020.
22. Our Principles say good administration means ‘getting it right’ and ‘being customer focused’. Public bodies should take account of policy, guidance, and legislation, and they should take account of individual circumstances.
23. Mr J believes HMRC should have told him his SATR did not appear as submitted when he telephoned it to pay the tax he owed in January 2020. We agree it would have been helpful for HMRC to have told Mr J this information, but we have not seen a standard to demonstrate this was a requirement. This is because the onus is on the individual to file their SATR. Also, it is not uncommon for HMRC to see taxpayers making payments in advance of filing their SATR, as there is an option for taxpayers to set up budget payment plans. We consider HMRC ‘got it right’ - its actions took account of its statutory duties and its guidance.
24. HMRC said its website generates an online acknowledgement to the taxpayer when they submit their SATR online. Therefore, HMRC consider Mr J would have known if his SATR submission was successful in January 2020, as he would have automatically received an acknowledgement with a reference number from HMRC. HMRC told us it had no IT issues on 20 January 2020 which would have prevented Mr J from filing his 2018/19 SATR and receiving an acknowledgement. Further, the evidence shows HMRC told Mr J on 12 January 2021 that its officer had waived the late filing penalty because they accepted Mr J thought he had filed his SATR, even though he did not pass through the final submission gateway. HMRC also asked Mr J to provide evidence he had submitted his SATR before the deadline. HMRC offered to investigate the situation further if Mr J could provide a reference from when he had submitted his SATR in January 2020. However, Mr J was unable to provide this evidence.
25. On the basis of the above evidence, we are persuaded HMRC’s actions were in keeping with our Principles of getting it right and being customer focused. It took account of Mr J’s circumstances and weighed up the evidence in a reasonable way when deciding Mr J had not submitted his SATR in January 2020.
Issue 1(b) Whether HMRC issued a late filing penalty to Mr J in March 2020
26. Mr J told us HMRC did not send him a late filing penalty notice in March 2020. Mr J said he only received the one HMRC posted to him in November 2020. However, we have seen evidence to show it was likely, on the balance of probability, HMRC sent a late filing notice to Mr J in February 2020. HMRC told us it did not have a copy of the late filing penalty it posted to Mr J as these are automatically generated by the system. Instead, HMRC sent us a copy of Mr J’s record which showed a late filing penalty was created on 12 February 2020, as well as November 2020. HMRC said the system would have issued the late filing notice within seven days, and Mr J had 37 days from the date of creation (12 February 2020) to pay the penalty or appeal it. Based on this evidence, on the balance of probabilities, we consider HMRC issued a late filing notice to Mr J in February 2020 (not March 2020 as HMRC told Mr J) and a second notice in November 2020. To make clear, we are not saying we think Mr J received the late filing notice in February 2020, but we are satisfied that it was more likely than not that HMRC sent it. We do not consider any problems with the post/mail process would be the fault of HMRC, as this relates to the actions of another organisation.
Issue 1(c) Whether HMRC failed to take account of Mr J’s individual circumstances in relation to SEISS
27. We understand why Mr J asked HMRC to reconsider his access to SEISS when it waived his late filing penalty. HMRC said it waived the penalty because it accepted Mr J thought he had filed his SATR online even though he had not passed through the final gateway of HMRC’s systems.
28. Our Principles say good administration means public bodies should ‘get it right’ by taking account of legislation and existing policy/guidance. The evidence shows HMRC’s processes for waiving late filing penalties was separate to how it assessed eligibility for SEISS. The legislation for late filing penalties allowed for flexibility, for example the Finance Act 2009 accepts a ‘reasonable excuse’ to cancel late filing penalties. The legislation for SEISS (the Directions) did not make this provision. It required a SATR to be submitted by 23 April 2020.
29. Supporting the Directions for SEISS, HMRC developed a policy approach and guidance to apply discretion for SEISS by allowing individuals access to the SEISS grant if they met HMRC’s criteria. Among other things, HMRC’s policy approach for applying discretion to SEISS said:
· HMRC discretion for SEISS would be used in very limited circumstances · ‘The key rule is that the 2018-19 [SATR] return must be filed by 23 April 2020. (The filing date for the 2018-19 return was 31 January 2020, but for the purpose of qualifying for the SEISS scheme the Chancellor announced that returns received by 23 April would be accepted.) The SEISS does not make provision for cases where a later return will be accepted, for example on reasonable excuse grounds [paragraph 28].’
· HMRC may decide to exercise discretion if, among other things, the taxpayer had tried to be compliant and were unable to comply due to a particular vulnerability.
30. HMRC told us its consideration of Mr J’s claim of exceptional circumstances was not recorded, but as it sent Mr J a standard response on 26 November 2020, this signified HMRC had considered his case under its discretionary policy for SEISS. HMRC’s letter of 26 November 2020 to Mr J said:
· It was sorry to hear Mr J had concerns about his eligibility for SEISS · Mr J had not 100 per cent submitted his tax return for 2018/19 in January 2020 · HMRC issued a late filing penalty in March 2020 (this should say February 2020) which would have alerted him to non-submission of the SATR · Mr J only made contact with HMRC in November 2020 after the deadline for both phases 1 and 2 of SEISS had passed. Therefore, he was not eligible for the grant · HMRC appreciated Mr J was disappointed, but it had to treat customers the same – fairly and impartially.
31. We do not consider this response from HMRC was open and accountable, as our Principles would expect (see paragraph 37 below). However, it does not mean HMRC’s decision not to allow Mr J access to SEISS was flawed.
32. We recognise Mr J genuinely thought he had submitted his SATR in January 2020. HMRC’s view was that his circumstances did not meet the high threshold in HMRC’s discretionary policy for access to SEISS. HMRC’s policy approach is clear, those who have filed SATRs late, and have them accepted later on reasonable excuse grounds (such as Mr J) cannot have access to SEISS unless they meet additional criteria. When looking at these criteria, we have not seen evidence to show Mr J’s personal circumstances were so severe as to meet the high threshold (vulnerability) in HMRC’s discretionary policy. He had simply made a genuine error when trying to file his SATR in January 2020, which was not sufficient to meet HMRC’s discretionary criteria. As such, we consider HMRC acted in accordance with the Principles in that it followed its guidance by not applying discretion in Mr J’s case. Therefore, we consider HMRC’s decision not to allow Mr J access to SEISS took account of relevant legislation (the Directions) and policy (its discretionary policy).
Issue 2 – HMRC and the Adjudicator did not listen and repeated the same explanations
33. Mr J said HMRC and the Adjudicator did not listen to his concerns and the point he was making about his unique circumstances. Instead, they both kept repeating that the legislation did not allow him access to SEISS as he had not filed his SATR by the deadline of 23 April 2020.
34. The relevant standards about what should have happened are:
· our Ombudsman's Principles say good administration by public bodies means being ‘open and accountable’. They should state their criteria for decision making and give reasons for their decisions.
· HMRC’s complaints guidance says it will ‘handle your complaint fairly, confidentially and investigate the issues thoroughly.’
· the Adjudicator’s complaints guidance said it will: ‘Provide an independent review of complaints from customers that the department (HM Revenue and Customs/Valuation Office Agency) have been unable to resolve... Investigate your complaint, requesting information from the department where necessary to understand what happened... Make fair, balanced and impartial decisions based on evidence.’
35. We have considered the explanations provided to Mr J by HMRC and the Adjudicator, below.
HMRC
36. The evidence shows:
· Mr J told HMRC on 16 November and 1 December 2020 he wanted HMRC to review its decision on allowing him to receive SEISS. He said HMRC had not considered his point fully, in that as it had waived the late filing penalty for his SATR, it should have allowed him access to SEISS · HMRC told Mr J on 8 December 2020 and 12 January 2021 it had no discretion with the SEISS grant as it was bound by government legislation, which required the SATR to be submitted by 23 April 2020.
37. While HMRC’s complaints guidance said it would investigate complaints fairly and thoroughly, it wrongly told Mr J it had no discretion to grant SEISS outside the Directions. HMRC’s response to Mr J was inaccurate. While the Directions offered no flexibility, HMRC could award SEISS if its discretionary criteria were met. HMRC should have explained its policy on discretion to Mr J to a sufficient degree to allow him to understand why his circumstances were not exceptional for accessing SEISS. HMRC did not ‘thoroughly’ address Mr J’s complaint, which is not in keeping with its approach to complaints. This is maladministration. We find HMRC were not open and accountable because it did not provide accurate and sufficiently detailed information to explain its actions.
The Adjudicator
38. The evidence shows:
· Mr J told the Adjudicator on 15 January 2021, among other things, HMRC said even though his late filing penalty was dismissed, there was nothing it could do about his access to SEISS · The Adjudicator’s internal records included: - the caseworker said they had considered if HMRC should reconsider Mr J’s case through their discretionary panel. However, the caseworker said they did not believe Mr J would meet HMRC’s criteria - as HMRC’s discretionary criteria were not in the public domain, the Adjudicator could not refer to them in its decision - if the Adjudicator had been able to refer to the discretionary criteria, Mr J might have felt his circumstances had been considered.
· the Adjudicator told Mr J on 4 March 2021 he did not meet the criteria for SEISS, which required him to submit his SATR by 23 April 2020.
39. We recognise the Adjudicator identified HMRC’s omission, that HMRC had not considered Mr J’s circumstances under its discretionary policy. The Adjudicator’s records show it had considered whether it was appropriate to refer the case back to HMRC to allow it to consider if discretion should be applied to Mr J. However, the Adjudicator decided not to do this because it considered Mr J was unlikely to meet HMRC’s discretionary criteria.
40. We appreciate the Adjudicator was in an unusual situation. It wanted to tell Mr J why his circumstances were not sufficiently exceptional to allow him access to SEISS. However, the Adjudicator could not share this because HMRC’s discretionary criteria was not in the public domain. The Adjudicator judged this meant it was not possible to tell Mr J about the reasons he could not access SEISS. We do not agree.
41. The Adjudicator’s own guidance says it is ‘independent’ and makes ‘fair, balanced and impartial decisions based on evidence’. In accordance with our Principles (being open and accountable), we consider it is important customers are provided with clear and transparent reasons about decisions taken on their cases. HMRC’s decision whether to publish its discretionary policy is different to it explaining its decision in a transparent way. The Adjudicator should have told Mr J that HMRC was able to use discretion and explained why it considered his case was unlikely to meet the threshold. Instead, the Adjudicator failed to state the relevant criteria and did not give reasons for its decisions. Rather than telling Mr J his situation did not meet HMRC’s discretionary criteria for accessing SEISS and giving reasons for this, the Adjudicator simply repeated he did not submit his SATR by 23 April 2020. The Adjudicator missed an opportunity to rectify HMRC’s failure by providing a tailored and reasoned explanation about HMRC’s position on exceptionality for SEISS. For these reasons, we do not consider the Adjudicator was customer focused or open and accountable in its response to Mr J. It did not respond to Mr J’s individual circumstances or explain the reasons for its decision.
Injustice
42. We have considered the impact of HMRC and the Adjudicator’s failure to provide open and transparent responses and communication to Mr J. Neither HMRC or the Adjudicator provided Mr J with the clarity (remedy) he required to understand their actions and decisions. We trust the information and explanations in this report (issue 1c above) sufficiently explain why Mr J could not be awarded SEISS.
43. However, we consider there is a further impact on Mr J. He told us it was demoralising when other people told him they had received SEISS, and he could not understand why he had not. We recognise HMRC and the Adjudicator’s actions would have caused Mr J uncertainty and confusion, particularly as this happened at a time when Mr J was suffering the financial effects of the COVID-19 pandemic. We accept the confusion and uncertainty caused by these actions also led to further trouble and time for Mr J in pursuing his complaint.
44. In relation to HMRC, this meant Mr J’s confusion continued for 15 months. For the Adjudicator, we consider its failure to explain matters to Mr J sufficiently caused him inconvenience. It was a missed opportunity. It extended the period of his confusion by two months, from January 2021 when Mr J approached the Adjudicator to March 2021 when the Adjudicator issued its decision. These are unremedied injustices to Mr J and HMRC and the Adjudicator should put these right (see below).
45. We have also considered whether HMRC and the Adjudicator’s actions have caused a wider injustice. In other words, if HMRC and the Adjudicator’s failure to be open and accountable about HMRC’s approach to discretion on SEISS goes wider than this case. HMRC and the Adjudicator told us about their concerns over placing information about HMRC’s discretionary policy for SEISS in the public domain, in that it could increase instances of fraudulent claims. HMRC also said it received over 60,000 review requests for SEISS in the first month of SEISS being rolled out (May 2020). Therefore, we consider the problem is likely to be more widespread. We are not saying HMRC should necessarily place its discretionary policy in the public domain. That is a matter for HMRC. However, HMRC and the Adjudicator should provide sufficient information to explain their decisions when customers request it. Not doing so means customers could be confused about why they are unable to access the SEISS grant. This is potentially a systemic injustice.
46. In response, HMRC told us it considered there was a broader issue, in relation to supplying sufficient explanation to customers that was tailored to them and their specific circumstances. HMRC recognised that this should include why it may not be able to use its discretion, not only for complaints about SEISS, but also its complaint handling more generally. HMRC said it would be amending its complaint handling guidance, examples, and training products so it could make clear the importance of providing good quality explanations about its discretion. HMRC said it thought it was important to include this issue in its letter writing training for complaint handlers.
47. For the reasons above, we have not made a systemic recommendation for HMRC because it has already reviewed its learning from this case. Instead, we have asked HMRC to demonstrate the changes it has made as a result of this learning.