HM Revenue and Customs

3. Mr L complains about HMRC’s handling of a cost reimbursement issue. He says that our Office previously made recommendations and that HMRC has not followed them. Mr L says his accountancy firm told him HMRC would not consider reimbursement unless he paid outstanding fees first. After he made the payment, he complains there was a breakdown in communication between HMRC and the accountants, resulting in the denial of reimbursement.

4. Mr L says he is at a financial disadvantage after paying the fees, which he did on the understanding that HMRC would consider reimbursement, based on the outcome of his previous complaint.

5. Mr L would like HMRC to reimburse his accountancy fees and consider the evidence already submitted.

6. In 2014, our Office investigated and made a decision on a complaint from Mr L regarding HMRC's handling of VAT claims related to his property development partnership. The complaint was about misleading advice from an HMRC officer. Our investigation identified maladministration by HMRC and recommended it consider reimbursing Mr L’s professional fees.

7. On 12 October 2018, HMRC received the cost claim for £96,000 plus VAT for services provided by Mr L’s accountant between 2011 and 2016.

8. Between May 2019 and August 2022, Mr L and his accountants exchanged correspondence with HMRC to determine a reasonable amount for cost reimbursement. During this time, HMRC repeatedly requested further evidence, such as detailed timesheets or alternative documentation, to support the claim and evaluate basis for the fees.

9. On 8 August 2022, Mr L contacted his MP, who wrote to HMRC regarding the case. HMRC responded, stating that no commitment had been made to reimburse the full cost; rather, it had agreed to consider reimbursement. It reiterated the need for detailed timesheets so it could determine the appropriate level of fee reimbursement.

10. On 4 October 2022, HMRC informed Mr L that the Adjudicator’s Office, which is the next stage in the complaints process, could not review our Office’s recommendations or determine whether HMRC had appropriately actioned them. Following this, the complaint was referred to our Office by Mr L’s MP.

13. Mr L says HMRC has not complied with the recommendations our Office made in 2014, which was that HMRC should consider reimbursing Mr L’s accountancy fees. We have considered the evidence of HMRC’s compliance with that recommendation and its actions in its handling of the reimbursement of fees.

14. We can see that from HMRC’s letter to Mr L’s accountant of 29 June 2021, in which it explained that it does not agree the information provided is sufficient for it to make a decision regarding reimbursement. This shows it had engaged with the recommendation and considered the information provided but had determined more evidence was required.

15. We can see this is in line with HMRC’s Charter which says, ‘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. When we ask for information, we rely on you to give us full, accurate and timely answers. If you disagree with us, we’ll tell you about options available to you and work with you to reach an appropriate outcome quickly and simply.’

16. From HMRC’s correspondence, we can see that it requested timesheets from Mr L’s accountancy firm but did not receive them.

17. Mr L says he had to pay his accountancy fees first, and there was a breakdown in communication between HMRC and his accountants. We discussed this with HMRC and understand it disagrees that any breakdown occurred. It says that the evidence it requested was not provided by the accountants. HMRC says it requires detailed timesheets and advised that, if Mr L is unable to provide it with detailed time sheets, it would consider ‘Terms of Engagement’ and yearly invoices.

18. HMRC’s internal ‘Complaints and Remedy Guidance,’ says ‘Professional fees vary according to a number of factors such as location of the firm, the level of expertise or specialism offered, and the level of the person within the firm carrying out the work, and you will need to consider what is reasonable to reimburse.’ The guidance advises HMRC staff to consider ‘was the work done at the usual hourly rate and is evidence of this available, if required, by way of invoices and/or timesheets?.’

19. We can see from the above that HMRC was acting in accordance with its guidance by requesting timesheets, and that it has acted flexibly by explaining it will accept the alternative evidence described in order to progress Mr L’s request.

20. In considering this complaint we made enquiries with HMRC to see if it would open lines of communication with Mr L and confirm if it would still consider further evidence. HMRC agreed that it will consider Mr L’s claim if he provides the required evidence as mentioned above.

21. Therefore, considering the evidence from Mr L and HMRC, we can see no indication of maladministration as HMRC has acted in line with its ‘Charter’ and ‘Complaints and Remedy Guidance’ in considering Mr L’s request for reimbursement of accountancy fees, as recommended by our Office. We are glad to see HMRC remains open to resolving the matter, and we hope this further clarification is helpful to Mr L in moving the matter forward.

22. With the above in mind, we will therefore take no further action.

1. We have carefully considered Mr L’s complaint about HM Revenue and Customs (HMRC). We are sorry to learn the reasons for Mr L’s complaint, and the reasons for bringing it to our Office.

2. After reviewing the evidence provided by Mr L and HMRC, we have decided to take no further action with his complaint. This is because we have not seen anything to suggest it failed to act in line with relevant guidelines. We hope the following statement clearly explains how we have reached our decision.