Self-assessment refunds ‘stuck’ in HMRC up by 133% in 4 years

The gap between the number of tax repayments generated by self-assessment taxpayers, and the number of repayments that were issued by HM Revenue and Customs (HMRC), has increased by 133% over the four years since 2017-18.

According to new data obtained by Saffery Champness, the difference between the number of tax repayments generated by self-assessment taxpayers in 2020-21 through overpayment of tax, and the number of repayments that were actually cleared by HMRC and issued to taxpayers that year, increased to just over half a million.

A total of 2,833,400 self-assessment taxpayers generated 3,206,082 separate tax repayments in 2020-21 through overpayment of tax.

Meanwhile, the firm said the total number of repayments that were “successfully cleared” by HMRC and issued to taxpayers that year (2,704,031), represented only around 84% of repayments owed. This equated to a gap of 502,051, or 16%, between repayments claimed and repayments issued.

In comparison, in 2017-18, 2,673,701 repayments were successfully cleared by HMRC, equivalent to 93% of the total that were owed.

Taken together, the data, acquired from HMRC via a freedom of information request, revealed the annual gap between tax repayments generated and tax refunds issued increased by 133% over the four-year period between 2017-18 and the last financial year, 2020-21.

Zena Hanks, partner at Saffery Champness, said: “More and more taxpayers are experiencing huge delays – often up to a year or more – to their repayment claims being processed and the refunds making their way into bank accounts.”

“This is indicated by the fact that the number of repayments issued by HMRC as a proportion of repayments owed each year has been on a pronounced downward curve. This screams backlog, or even log jam, and causes real distress to taxpayers, many of whom will be understandably concerned about cash flow after a difficult couple of years in Covid-19 trading conditions.”

She added: “With no other options available after months of waiting, taxpayers have been forced as a final recourse to raise a formal complaint with HMRC – only to be told, in one instance we’re aware of, that a complaint about delays to a repayment can only be filed when the repayment has been received, sending the taxpayer further down the repayment rabbit hole.”