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Bull said: "This delay, which the Revenue blamed on a computer error, meant the client had to back out of an offer on a house. HMRC seems to be getting worse in this area — especially when it comes to taxpayers who have had the same circumstances for years and have repeatedly claimed refunds."
Several members of the Chartered Institute of Taxation (CIOT), the professional body, have complained about significant delays in receiving refunds for clients. It is not just those owed large amounts that are affected — those due small repayments have to wait weeks, or even months.
Mike Freer, the Tory MP for Finchley and Golders Green in north London, introduced a 10-minute-rule bill in the Commons this month, calling for HMRC to be subject to the same deadlines and penalties for tax refunds as those who owe money.
Freer said: "Small businesses' takings can vary hugely month-to-month and individuals' circumstances can change, meaning they find at the end of the financial year they have overpaid tax. HMRC is far too slow to repay and does not seem to appreciate the huge cashflow pressures that many people are under."
Overpayments can arise because of an error in your PAYE tax code or a change in circumstances. Higher earners may need to claim additional tax relief on pension contributions or gift aid donations, while pensioners could have paid too much tax on savings interest. Those who pay tax on account — a part-payment towards their next bill — can be due a refund if their income fluctuates.
Taxpayers must pay any tax due by the January 31 following the end of the tax year. If you are 30 days late, HMRC will charge interest of 3% on the amount owed, as well as escalating fines. HMRC, however, pays only 0.5% interest on outstanding tax repayments. Freer said the tax body does not hold information on the average time taken to process a refund.
If you have overpaid tax, the Revenue will assume you would prefer to offset the sum against future bills unless you actively claim a refund. For a self-assessment taxpayer, this is normally done by making a request on your tax return.
Angela Beech, a partner at Blick Rothenberg, the accountant, said: "I always advise taxpayers to tick the box requesting a refund, even if they do not think they are due anything. Also, you can try to speed up the process by filing an online return and providing bank details, rather than relying on HMRC sending a cheque." [The deadline for online returns is January 31.] The CIOT said the catch-all reason for late payments is the security checks used to validate taxpayers' identities.
Richard Mannion, national tax director at Smith & Williamson, the accountant, said: "The security checking process is not consumerfriendly — claims seem to disappear into a black hole, with no phone number, postal or email address for chasing up your refund."
If you have not received your repayment within about eight weeks of requesting it, Mannion advises sending a formal letter of complaint to your local tax office.
HMRC said: "In the majority of cases repayments are made in a few weeks. While we consider checks to be essential in some cases, we also acknowledge the importance of keeping delays in making repayments to a minimum."
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