Complaints made by taxpayers about HM Income & Customs have climbed to their highest stage in 5 years, with the proportion of instances leading to compensation additionally reaching a latest peak.
New figures obtained beneath the Freedom of Info Act by the Contentious Tax Group present that HMRC obtained 93,589 complaints within the 2024/25 tax yr, up from 78,542 in 2020/21, an increase of 19.2 per cent over 5 years.
The information suggests mounting frustration amongst taxpayers and advisers at a time when the tax authority has confronted sustained criticism over service requirements, processing delays and restricted entry to help.
The rise in complaints follows repeated warnings from watchdogs about declining efficiency ranges at HMRC. In January 2025, the Public Accounts Committee stated that phone response instances, typically considered as a barometer of service high quality, had continued to deteriorate from an all-time low recorded the earlier yr.
Skilled advisers say operational failings, together with incorrect tax coding notices, misapplied changes and processing backlogs, are fuelling a cycle of error and criticism.
Andrew Park, tax investigations accomplice at Worth Bailey, talking on behalf of the Contentious Tax Group, stated the development mirrored rising misery amongst taxpayers.
“HMRC is being compelled to just accept that an ever-increasing variety of taxpayers are struggling fear and misery as a consequence of its motion or inaction,” he stated.
“Yearly hundreds of individuals endure monetary loss, wasted time and unnecessary misery as a result of HMRC struggles to ship the fundamentals.”
The rise in complaints has been accompanied by a marked enhance in compensation funds. The variety of instances during which HMRC paid redress rose by 35 per cent, from 11,333 in 2020/21 to fifteen,304 in 2024/25.
Over the identical interval, the proportion of complaints leading to compensation climbed from 14.4 per cent to 16.4 per cent, the very best stage in 5 years.
Of explicit observe is the rise in funds linked particularly to “fear and misery”, which has reached practically 10,000 instances in the newest yr.
Nevertheless, whereas extra taxpayers are receiving compensation, the common payout has fallen. In 2024/25, the common redress cost stood at £125.27, the bottom common determine throughout the five-year interval.
“Most taxpayers complain merely to get errors corrected,” he stated. “But poor service ranges could cause monetary losses that dwarf the modest compensation HMRC is prepared to supply.”
Tax specialists argue that complaints about service requirements can not simply be separated from substantive tax disputes. Errors in coding notices, delays in processing returns and system errors can lead on to incorrect tax liabilities, and extra monetary stress for people and companies.
“Operational failings is usually a main driver of tax errors that contribute to rising criticism volumes,” Park stated.
In lots of instances, taxpayers are compelled to take a position vital time, or incur skilled charges, to resolve points that stem from administrative errors slightly than disputes over tax regulation.
The Contentious Tax Group additionally highlighted issues that HMRC’s continued push in direction of digitalisation could also be exacerbating the issue.
The tax authority has more and more inspired taxpayers to make use of on-line techniques and automatic companies, positioning digital transformation because the long-term resolution to useful resource constraints and efficiency challenges.
Critics, nevertheless, warn that conventional help channels are being scaled again earlier than digital options are absolutely dependable.
“HMRC is pushing taxpayers in direction of digital techniques that aren’t but prepared, whereas withdrawing the human help individuals nonetheless want,” Park stated. “This can be a mixture that dangers compounding operational difficulties and driving complaints even greater.”
As HMRC prepares for additional reforms, together with the growth of Making Tax Digital necessities to extra teams of taxpayers, advisers worry criticism volumes might rise additional if service capability doesn’t enhance.
With practically 94,000 complaints lodged previously yr alone and compensation ranges at a five-year excessive, the figures underline the rising strain on Britain’s tax authority to revive confidence in its service supply.
