Home > Publications > Selected cases— Parliamentary > Selected Cases and Summaries of Completed Investigations: April 2001 to September 2001 > Case No. C.397/01, C.440/01 and C.1130/01
Parliamentary Commissioner for Administration Selected Cases and Summaries of Completed Investigations
PCA 6th Report – Session 2001-2002
Chapter 2
INLAND REVENUE
Mishandling of tax affairs
Mr P complained that the Inland Revenue mishandled his tax affairs and that as a result he suffered a financial loss. Mr P also complained that as a result of maladministration by the Revenue, over a period of twelve years, his and his wife’s health had been damaged.
The Ombudsman found no evidence of maladministration by the Revenue in their handling of Mr P’s tax affairs for the period 1996 to present. There was also no evidence of a direct link between Mr and Mrs P’s ill health and the actions of the Revenue. The Revenue offered to provide Mr P with an explanation of his income tax.
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Alleged aggressive behaviour and unfair treatment
Mr X began trading through his limited liability company in 1991. He submitted regular returns for tax and national insurance and received two inspections by the then Contributions Agency - in 1992 (of which there was no surviving record) and 1997 - which found nothing untoward. An Inland Revenue compliance officer told Mr X at a home visit in December 1998 that he appeared to owe some £20,000 in tax going back over six tax years. The main problem related to (taxable) home to work mileage and subsistence payments; it also appeared that Mr X had not declared his use of a company car. Two days later the officer suggested that with national insurance, the liability could be in the region of £38,000. Following a further meeting in March 1999 the Revenue sent formal tax assessments totalling £20,378. Mr X appealed. His new accountants then proposed a settlement of £770 based upon a global settlement which had been agreed regarding some 6,000 other clients of the accountants, mostly small computer firms. In August 1999 Mr X, through the accountants, offered £6,000 in full and final settlement of matters appealed. That was accepted in due course by the Revenue. During the Ombudsman’s investigation the Revenue said that they regarded national insurance charges of £15,680 as having been discharged. The Ombudsman did not uphold Mr X’s substantive complaints, in particular concerning the conduct of a compliance officer and his manager. He found no unfairness in the Revenue’s handling of his tax affairs and regarded Mr X as belonging to a class different from those who were the subject of the global settlement.
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Compensation for loss of leisure time
Mr K complained that the Inland Revenue had refused to offer him sufficient financial redress to compensate for the time that he had had to spend sorting out his wife’s tax affairs. This was despite the fact that the Revenue had admitted responsibility for the mishandling of his wife’s tax affairs and that the Chairman of the Board of Inland Revenue had apologised for the poor handling of the case. Mr K had claimed £500 but the Revenue had offered only £150.
The Ombudsman found that the difference between what Mr K had claimed and what the Revenue had offered was accounted for by their differing views about whether and how far Mr K should be compensated for the loss of his leisure time. Whereas Mr K considered that he should be compensated in full, the Revenue were of the view that a taxpayer’s time should not be compensated for except where it could be shown that there had been a direct loss of earnings. The Revenue’s practice of reimbursing only direct financial loss is long-established and is subject to review from time to time. The Ombudsman was satisfied that the Revenue, in determining the amount of redress offered to Mr K, had acted properly in accordance with its own policies and practices on redress. On the more substantive question, raised by Mr K, of whether the Revenue’s own policies and practices on the redress of leisure time were appropriate, the Ombudsman concluded that he did not have the power to investigate.
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