HM Revenue and Customs

5.Ms A complains to us about the actions of HMRC. She tells us she is unhappy that HMRC charged interest on her 2020-2021 Corporation Tax, particularly as she says HMRC is responsible for delays to the tax bill and the interest that therefore accrued. She says that as these delays were caused by HMRC, she should not be required to pay the interest due. She also tells us HMRC handled her complaint poorly and did not exercise discretion when requiring her tax submission be made online.

6.Ms A tells us dealing with this matter has caused significant distress and has affected her overall health. She would like recognition of mistakes by HMRC and service improvements.

7.Ms A complains to us about HMRC and its handling of her Corporation Tax liability for the 2020-2021 tax year, specifically in respect of the interest she was charged. Ms A tells us she submitted a CT600 form to HMRC on 19 August for her company’s tax return. This was received by HMRC on 24 August 2021.

8.The CT600 form is a self-assessment tax return form and is used by companies when submitting their tax return. The CT600, along with other supporting documents, is submitted to HMRC and forms the ‘Company Tax Return’. Ms A submitted hers and asked HMRC to consider her CT600, and the computations she provided, as her company tax return as she did not feel comfortable submitting her return online.

9.Ms A contacted HMRC in October and December 2021 to follow up on her CT600 and accompanying information. Ms A submitted a Tier 1 complaint to HMRC on 12 January 2024 and said she would not be paying interest on any Corporation Tax due by 31 January 2022 as HMRC had not acknowledged any of her letters from 24 August 2021 onwards.

10.HMRC contacted Ms A by letter on 4 March 2022 and apologised for the delay in responding to her previous correspondence. The letter explained that CT600 returns had to be filed online unless HMRC was given a reason for not doing so. The letter advised that HMRC was unable to process her manual return and she would need to resubmit it as there was information missing from her CT600 form.

11.Ms A submitted a Tier 2 complaint to HMRC received on 22 March 2022. Ms A explained that she had limited computer skills and did not have anybody who was able to assist her with the online tax return submission. She expressed her dissatisfaction that HMRC had not processed her manual return submitted in August 2021.

12.HMRC wrote to Ms A with its Tier 2 response on 13 June 2022. It apologised for the delays in responding and said it had been unable to process her CT600 form of August 2021 because it was missing information. As before, HMRC asked Ms A to resubmit the form in full online.

13.Ms A was dissatisfied with this response and her MP wrote to HMRC in July 2022. That letter set out that Ms A was unhappy that HMRC had still not responded to the tax computations she had provided in August 2021. It explained that she felt pressured to submit her form to HMRC online, which she did not wish to do.

14.HMRC provided Ms A’s MP with a response on 17 August 2022 and reiterated its previous explanation to Ms A that her CT600 form had been incomplete, and she needed to resubmit this information online. The response said it was not HMRC’s responsibility to complete the form; however, HMRC said on this occasion it had made an exception and would complete the form with the computations Ms A had provided in August 2021 with the CT600.

15.HMRC went on to say the relevant tax was due and this would be subject to interest. It said that Ms A could contact its Interest Review Unit (IRU) and ask it to review the interest charges after she had paid the tax due.

16.Ms A emailed HMRC on 17 August 2022 expressing her dissatisfaction with the response she had received. Ms A said that HMRC had never specified to her which boxes were incomplete and had caused unnecessary delays in the process. Ms A said she would like some form of financial redress in recognition of this and asked for her corporation tax bill to be sent to her amended, without any interest charged. Ms A said she did not agree with the advice that she would need to write to the IRU and request a review of the interest charges.

17.Ms A received a response from HMRC on 7 September 2022 via email. It explained the income figures it had used for her return, as HMRC had completed the tax return on her behalf as an exceptional measure. HMRC said interest is automatically charged when tax is due and reiterated that it cannot review interest charges until the tax bill has been paid in full.

18.Ms A submitted a further complaint letter, received on 5 January 2023 by HMRC. This letter emphasised Ms A’s dissatisfaction with HMRC’s previous responses and repeated her request for financial redress and the removal of the interest charges. HMRC responded on 17 January 2023 and said redress was not appropriate as it had not made any mistakes in its service. HMRC said Ms A had completed its complaints process.

19.Ms A’s MP wrote a further letter to HMRC, received on 9 February 2023. It said that Ms A wanted confirmation HMRC would not be charging her interest on her late payment of her 2020-2021 Corporation Tax bill. The letter said Ms A would not pay her tax bill until she received this confirmation.

20.Ms A also submitted a complaint to the Adjudicator’s Office (AO) on 20 March 2023, which is the next stage in the HMRC complaints process. HMRC wrote to Ms A and her MP on 23 March 2020 and reiterated again that she would need to pay her Corporation Tax bill before submitting a request to the IRU. The AO issued its response to Ms A on 4 July 2023 and explained it did not uphold her complaint as it had not identified any mistakes by HMRC in its handling of her corporation tax matters. Ms A approached our Office in November 2023.

23.Ms A is dissatisfied with the responses she has received from HMRC and the AO when she complained about the way HMRC had handled her concerns about her Corporate Tax liability and the additional interest for the 2020-2021 tax year.

24.In its response to Ms A, the AO said it was unable to make a decision on the part of her complaint that relates to the calculation of interest, and her request to stop interest from accruing. The AO said this was outside its remit as it related to a government policy as set out in the Finance Act 2009. Ms A says it is wrong for HMRC to charge her interest as she believes it accrued as a result of delays by HMRC.

25.HMRC’s ‘Debt Management and Banking Manual’ (DMBM), sets out the correct process regarding interest charges. Section 404010 explains:

‘If tax is paid late we have a statutory obligation to charge interest. There is no appeal route for disputes about interest. But we will, in certain circumstances, consider giving up some or all of the interest if a customer objects to the charge or a review identifies that a HMRC mistake or unreasonable contributed to some or all of the build-up of interest.

In the first instance you should deal with enquiries about, and objections to, an interest charge locally. Exceptionally, you can cancel or revise a charge where this was made incorrectly. But only the Interest Review Unit (IRU) can agree to set aside the payment of a correctly raised interest charge.’

26.The DMBM explains that HMRC has a responsibility to collect interest due, in line with its obligations as set out in the Finance Act 2009. As such, we have not seen any indication of maladministration in HMRC calculating the interest due and making Ms A aware that it was payable.

27.It is open to taxpayers to object to any calculation of interest, and the DMBM sets out that any concerns should initially be dealt with ‘locally’, i.e. the relevant department within HMRC should consider and respond to those concerns. If the disagreement is not resolved, the taxpayer needs to contact the IRU as only the IRU is able to set the interest aside, unless the interest was raised in error.

28.In this case, the interest was not raised in error; rather, Ms A says it would not be fair to charge the interest as it would not have arisen but for the time taken for HMRC to respond to her process her manual tax return.

29.The DMBM states that an objection includes ‘pleas for waiver or reduction to correctly raised charges due for example to ignorance of the rules or alleged delay’. As alleged delay is the basis for Ms A’s request that the interest be set aside, HMRC acted in line with its guidance by attempting to respond ‘locally’ and then advising she would need to pursue her request with the IRU.

30.Ms A says she does not feel she should have to pay the interest and approach the IRU. We can see from the information provided that HMRC explained to Ms A on 17 August 2022, 7 September 2022 and 20 March 2023, that the IRU is only able to review the interest once the 2020-2021 CT bill has been paid. Ms A has advised us that the CT bill has now been paid, and so it is open to her to ask the IRU to set the interest aside.

31.This may resolve Ms A’s concerns. However, if she wishes to make a complaint about the IRU’s handling of her request, it is open to her to make a new complaint about those matters and complete the complaints process at that time. We are not able to give a view on any actions by the IRU at this time, nor any matters which have not yet been through the HMRC complaints process, as it would not be in line with our role as the final stage of the complaints process to do so.

32.After reviewing the information available to us, we can see that HMRC has provided Ms A with correct information, in line with its Charter, which states that, ‘We’ll give you accurate, consistent and clear information. This will help you meet your obligations, and understand your rights and what you can claim […] If you disagree with us, we’ll tell you about options available to you’.

33.This is also in line with our Principles of Good Administration which state that, ‘Public bodies should give people information and, if appropriate, advice that is clear, accurate, complete, relevant and timely’.

34.Therefore, we will take no further action in relation to this part of the complaint.

35.Ms A has also complained to us about the delays in handling her tax return, and we have considered this matter, separate to the concerns about HMRC’s decisions regarding interest which we have considered above. Ms A says that she submitted her CT600 and provide her computations in August 2021 and requested that this be treated as a manual submission of the 2020-2021 tax return.

36.Ms A did not receive a response and submitted further correspondence in October and December 2021, followed by a complaint in January 2022. As outlined in the background above, she received a response in March 2022 which explained that paper returns had been placed on a worklist, due to high demand, and had taken longer to process than expected. As mentioned above, HMRC advises tax returns must be submitted online, unless an individual has an exceptional reason for not doing so.

37.The HMRC ‘Company Taxation Manual’ clearly states that returns must be filed online, and this is explained in section CTM93080, which states, ‘It is mandatory for companies to use online filing to submit company tax returns for accounting periods ended on or after 1 April 2010. There are only very limited exceptions to this requirement, see COM60040’.

38.Ms A indicates that she believes she should have been exempt from the online tax return process as she struggles with using a computer. We understand that not everyone is confident in their computer literacy and that some may find it difficult to undertake an online submission. However, after reviewing the exceptions on the Taxation Manual list, we can see that this is not grounds for an exemption from submitting returns online.

39.We have provided the list of exemptions below:

• ‘Companies that are run entirely by individuals who are practising members of a religious society or order whose beliefs are incompatible with the use of electronic communications are not required to file online.

• Insolvent companies within a formal administration or winding up procedure are excluded from the legal requirement to file online. However, solvent companies being wound up under a members’ voluntary liquidation are not excluded from online filing.

• Any computation forming part of a charity’s company tax return must be in iXBRL format. However, no computation is required at all where the CT600E (Charities and Community Amateur Sports Clubs (CASCs)) supplementary page of the return is completed and confirms that all income and gains of the charity are exempt from tax and have been or will be applied for charitable purposes.

40.We can see none of the above categories apply to Ms A and therefore HMRC was acting in line with its guidance in advising she is required to submit her tax returns online.

41.We can see that there were some delays in responding to Ms A’s manual tax return, and this is not in line with HMRC’s Charter, which says it will be responsive and ‘answer your questions and resolve things first time, or as quickly as we can’. It is clear that there were periods of several months in responding to Ms A’s correspondence, and this is an indication of a failing which evidently caused Ms A frustration.

42.We have not seen anything to indicate this had any impact more widely on Ms A’s tax matters or prevented her from submitting her tax return online, as the guidance available to the public at that time was clear that an online submission was required.

43.The evidence available to us shows that HMRC recognised its poor service and apologised to Ms A in its correspondence with her in March 2022 and June 2022. It also advised it would complete her tax return for her as an exceptional measure, in order to be customer focused.

44.Having considered our Principles for Remedy, which say that organisations should return those affected to the position they were in before the mistake occurred, or compensate them appropriately, we can see HMRC has taken appropriate action to put right the frustration caused.

45.With the above in mind, we cannot see any indications of failings by HMRC in its handling of her requests for removal of interest due on tax, and where it made mistakes in responding to her it has taken action to put things right. As such, we will take no further action.

46.We know Ms A continues to feel very unhappy with the outcome of her complaint, so we hope we have clearly explained how we thought about the concerns she raised and reached our decision in this case.

1.We have carefully considered Ms A’s complaint about HM Revenue and Customs (HMRC). We can see from her correspondence that she is unhappy with the responses she has received to her complaint and believes she has not received a fair outcome to her concerns. We were sorry to hear these events have caused her such frustration.

2.Having considered the evidence available to us, and the standards and guidance that set out how HMRC should carry out its work, we have decided to take no further action. This is because we cannot see any indications of maladministration by HMRC in its handling of her requests to set aside interest due on tax. Where it delayed in responding to her correspondence, we can see HMRC made some mistakes but that it has recognised its errors and taken appropriate action to put things right.

3.The complaints we receive give us valuable insight into the organisations we investigate, so we would like to thank Ms A for sharing her experiences with us.

4.We appreciate Ms A feels strongly about the complaint, and our statement below sets out the reasons for our decision.