9. The law says we cannot investigate a complaint where a person had the option to take legal action, unless we consider this was unreasonable in the circumstances. We asked Mr Y about his circumstances and the outcomes he wants. We do not consider whether legal action would have succeeded but whether it would have been a reasonable option to take.
Income tax for the 2015/16 and 2016/17 tax years
10. Mr Y complains that HMRC wrongly decided the amount of income tax he should pay based on his earnings for the 2015/ 2016 and 2016/17 tax years.
11. When HMRC finalised its enquiries it sent him a series of letters dated 11 September 2020. One of the letters explained its findings for the 2015/16 tax year. It set out how much tax Mr Y owed and how much he had paid. Its letter also explained what Mr Y could have done if he disagreed with HMRC’s actions. It said:
‘You can appeal if you disagree with: • our conclusion • the amendment to your Self Assessment tax return
If you want to appeal, you need to write to us by 11 October 2020 telling us why you disagree. If we cannot then reach agreement, you can: • ask for an independent HM Revenue and Customs officer to review our conclusion, the amendment to your Self Assessment tax return, or both • appeal to an independent tribunal
If you choose to have a review, you can still appeal to the tribunal if you’re not satisfied with the outcome of the review. If you appeal to the tribunal, you’ll need to send them a copy of this final closure notice. If you do not, they may refuse to consider your appeal. To find more information about appeals and reviews, go to www.gov.uk and search for ‘disagree with a tax decision’’.
12. HMRC’s letter summarising its enquiry into the 2016/17 tax year explained, ‘Your 2016/17 Self assessment return was removed from our system on 23 November 2017. As there was no return to enquire into our letter to you of 10 July 2018 is null and void. Please accept my apologies for this oversight.’ The letter repeated the same routes Mr Y could take if he disagreed with HMRC’s decision.
13. Both letters explain that Mr Y could have appealed to a tribunal at the time. Its advice was supported by the information available online that says taxpayers can approach a tribunal if they are unhappy with how HMRC has calculated the income tax they owe.
14. Mr Y told us that HMRC’s actions mean he has overpaid his taxes. A tribunal would have established the facts of the case and reached a view on whether HMRC’s decisions were correct.
15. Mr Y says he would like HMRC to correct his tax record. If the tribunal found HMRC made a mistake then it would have directed it to recalculate Mr Y’s tax and correct his record. A tribunal could have achieved this outcome for him.
16. Mr Y also says he wants a personal apology from the tax officers involved and financial compensation. These outcomes are unlikely to come from a tribunal but are things we can achieve. We must point out that the appropriate place to challenge HMRC’s tax decision is at tribunal. If it found HMRC made a mistake, HMRC may have been willing to do what Mr Y is asking for.
17. We recognise that HMRC sent Mr Y his appeal rights in September 2020. There is typically a 30 day time limit to make an appeal with the first-tier tribunal, and Mr Y is now too late to take this route. We must consider whether the tribunal was available at the time of the events and if it was reasonable for him to explore it then. We have looked at if it would have been reasonable for Mr Y to do this at the end of this statement.
Length of HMRC’s investigation of the2016/17 tax year
18. Mr Y also complains that HMRC’s investigation took too long. He says HMRC should have closed the enquiry once it discovered he had no income from earnings for that tax year.
19. When HMRC opened its enquiry it sent him a letter dated 28 June 2018. It directed him to a website that explained what he should do if he felt the enquiry should be closed. The website explained, ‘You can apply for a ‘closure notice’ if HMRC opens an enquiry to check your self-assessment tax return for direct tax and you want it to be closed.
The tribunal will decide when HMRC should close the enquiry.
You cannot apply for a closure notice if your tax return is being checked for indirect tax.’
20. We spoke to HMRC about this tribunal option. It told us that when it opened its enquiry it sent him the form CC/FS1a. This form explains what someone should do if they believe HMRC should stop the compliance check. The form said, ‘If you think we should stop the check, you first need to tell us why. If we do not agree, you may be able to ask the independent tribunal that deals with tax matters to decide if we should stop it.’
21. If Mr Y believed HMRC was unfairly continuing the enquiry at any point, he had the option to tell HMRC. If HMRC continued to investigate his tax affairs then Mr Y could have approached the tribunal. There is no sign he took any of these steps despite the advice HMRC provided at the start of its enquiry.
22. Had Mr Y approached a tribunal it would have reached a decision on whether the enquiry should continue. If it had upheld his complaint then the enquiry would have ended and closed, resolving his problem at the time.
Reasonableness
23. Mr Y had the opportunity to resolve his problems by tribunal. We have considered whether it was reasonable for him to take this route at the time.
24. As part of our consideration we asked Mr Y why he did not approach a tribunal.
25. Mr Y told us he was caring for his sick parents at the time. Understandably this was a priority for him, causing stress and taking a lot of his time. Mr Y added that he also raised his problem with HMRC’s counter avoidance department, HMRC’s legal department, two adjudicators, the police and us. He says the fact he has done this means he should not have to complain to the tribunal as well.
26. It is understandable that Mr Y felt he was unable to find time while caring for his parents. However, he did find time to continue his complaint with several other organisations. The tribunal process is designed to be used by the general public and does not require any specialist legal knowledge or representation. Mr Y may have been able to get support from an organisation like Citizens Advice. Tribunal forms are easily accessible online, along with booklets explaining how the process works.
27. With the above in mind we are satisfied that Mr Y had a reasonable opportunity to appeal HMRC’s decisions on his income tax and the length of the enquiry. While Mr Y had different priorities these were not so much of an obstacle to stop him from trying to resolve his problems by going to different organisations. As tribunals are so accessible he should have approached one at the time.
28. We understand this is still distressing to Mr Y and it is unfortunate to hear he feels overtaxed and bullied. We hope he understands why we cannot investigate matters further.