Inland Revenue Manuals: Redress Handbook

The Inland Revenue have put a copy of their Redress Handbook on-line. The handbook is written for the staff of the Inland Revenue and is published for the information of taxpayers and their advisers.

Although the manual is neither comprehensive nor definitive it does give plenty of useful information on how the Revenue deal with claims. The Inland Revenue staff are expected to use their own judgment, when applying the guidance to the facts of a particular case.

Main Contents

The guidance in the manual is based on the law as it stands at the time of publication. If the law changes the Inland Revenue will make changes and will give notice through a tax bulletin or press release.

Subject to certain qualifications, readers may assume that the guidance given will be applied in the normal case. Where the Inland Revenue considers that there is, or may have been, avoidance of tax, however, the guidance will not necessarily apply.

The guidance in this handbook does not affect any right of appeal you may have as a taxpayer. Information about appeals is contained in leaflet IR37 Income Tax and Capital Gains Tax Appeals which is available from any Tax Enquiry Centre or Tax Office.

Further guidance on making a formal complaint, if the matter has not been settled by the Officer in Charge to you satisfaction, is set out in leaflet IR20 You and the Inland Revenue. The leaflet includes information about the Revenue Adjudicator and the Parliamentary Ombudsman. This leaflet is also available from any Tax Enquiry Centre or your local Tax Office.

The following are useful extracts from the Manual:

Purpose of the Handbook

1.1.1. This handbook is a guide for Executive Offices on the operation of the Department's policy on financial redress for Inland Revenue error or delay, as published in Code of Practice 1 `Mistakes by the Inland Revenue'.

Links to Complaints Handbook/Customer Service Manual

1.1.2. The Complaints Handbook (CH) gives guidance to managers and staff in all Inland Revenue offices on the handling of complaints generally. That guidance applies equally, if not more so, to specialist complaints staff in Executive Offices, who are expected to give the lead and set a good example. You should therefore treat the CH as an integral part of this Redress Handbook (RDH), and pay particular regard to the messages in Parts I and II - Approaching Complaints in a Positive Way, and Dealing With and Preventing Complaints. The above guidance is incorporated in the new Customer Service Manual.

1.1.3. Complaints and claims may come direct to you from taxpayers, or be referred to you by local offices. The need for action, and for contact with the taxpayer, will depend on what has already happened on the case but you should use the CH guidelines as a general check, regardless of whether or not financial redress may be due. Prompt steps may be needed to get the case on the right track in order to avoid further cause for complaint.

1.1.4. Paragraph 5 of the CH summarises the position on financial redress, and gives some pointers about the consideration of cases under Code of Practice 1. The RDH covers the more detailed questions to be reviewed when offices refer cases to you, or you receive claims direct from taxpayers or agents.

1.1.5. As stressed in the Complaints Handbook:
  • Keep an open mind, and do not immediately jump to a defence of what has happened.
  • Look at things from the taxpayer's point of view.
  • Consider whether redress is due, even though the taxpayer may not have made a claim.

What is Serious Error?

3.1.2. The tax system is operated by human beings, whether Revenue staff or taxpayers and their agents, and mistakes are bound to happen. In reviewing cases, you have to decide whether the Department's errors have crossed the boundary from simple to serious and in many cases this is difficult to judge. The Board's original Statement of Practice on financial redress:

"described serious error as `something which no responsible person, acting in good faith and with proper care, could reasonably have done"

"indicated that non-serious error was ` a pardonable error, or even an innocent misunderstanding"

An example of action or inaction which amounts to serious error:

b) Inspector took up legitimate enquiries about whether expenditure qualified for capital allowances but quoted tax case which was totally irrelevant, because he misunderstood a phrase used in it. Persisted with his view despite opposition from accountant who spent time researching the case and running a counter argument . Direct costs of the unnecessary work were reimbursed.

Objective Judgment

3.1.3. Making an objective judgement about mistakes can be difficult but it may be useful to stand back and consider how you feel when mistakes are made for example by the Department or by public utilities. This is all part of the process of putting yourself in the shoes of the taxpayer. We may be irritated by mistakes in codings, bills etc, but we have to recognise that such mistakes are bound to be made by organisations dealing with very large numbers of customers. Taxpayer surveys confirm that our prime concern is normally to have things put right, and to receive an apology. We do not automatically think of financial redress but are more inclined to think it is justified when the mistake has had a significant effect on us.

Complainant not Satisfied

10.1.1. Complainants may not be satisfied with your response to their claim. They may decide to:
  • complain direct to the Adjudicator's Office, who may ask you for a report (see paragraphs 10.2.2. - 10.2.6.)
  • go to their Member of Parliament, who may decide to write to your Director before considering an approach to the Ombudsman (see paragraphs 10.3.1. - 10.3.3.)
  • write direct to the Executive Office.
10.1.2. The pointers below may help when responding to complainants who write direct to you, but the principles apply equally to other situations:
  • Has the Executive Office review been sufficiently thorough?
  • Are there any fresh facts or aspects which need to be looked at?
  • Run through the other checklists.
  • If there is some misunderstanding, did you explain matters clearly enough in your previous letter?
  • Might it help to check with Business Operations Division your understanding of the Department's redress policy?
  • Should senior managers be consulted?
  • Is there any justification for increasing the amount of the redress?
If you are not satisfied having complained to the Executive Officer the next step is to contact the Adjudicator's Office. The process then will be for the complainant and the Revenue to enter mediation. This step needs to be completed before you contact your MP with regards to a referral to the Parliamentary Ombudsman.

If you wish to take legal action, it should be served, by virtue of the Crown Proceedings Act 1947, on the Inland Revenue the name of the Department being `The Commissioners of Inland Revenue`. The proceedings should be served by post in England and Wales to `The Solicitor of Inland Revenue, Somerset House, London WC2R 1LB.