HMRC's Slow Tax Rebate Process: A Year-Long Wait for Some
HM Revenue and Customs (HMRC) is facing criticism for its slow response to tax rebate claims, with some individuals waiting over a year for their refunds. This delay is causing financial strain and frustration for those affected, who are often self-employed or pensioners.
The issue has been exacerbated by HMRC's focus on response targets for current claims, leading to a backlog of older requests. Self-employed construction worker Simon Hughes, for instance, is still waiting for his £4,550 tax rebate claimed last April, with HMRC estimating a wait until July 2026. This delay is particularly frustrating as individuals who owe HMRC money face penalties for late payments.
The Institute of Chartered Accountants in England and Wales (ICAEW) has highlighted the negative impact of significant backlogs on businesses and individuals. Lindsey Wicks, a senior technical manager at ICAEW, noted that HMRC's service updates show claims for tax repayment dating back to January 2025 and self-assessment repayments for requests made in March 2025. This suggests that efforts should be directed towards clearing the old backlog rather than responding to new correspondence.
British pensioner Jill Eden, who lives in the Netherlands, had to borrow money while waiting for a £48,000 rebate from HMRC. She submitted her claim in April under the double taxation treaty, expecting a resolution by October, but has heard nothing since. The lack of communication and the inability to contact HMRC by phone have added to her frustration.
Jane Leigh, a resident in France, also encountered delays. She was told that the refund of £78,000 in tax due after cashing in her UK pension was approved in September, seven months after submitting her claim under double taxation rules. Despite being informed that the cheque has been sent, she continues to face uncertainty and different explanations for the refund's absence.
The situation is further complicated by the fact that while taxpayers face stiff penalties for late payments, HMRC pays modest compensation when it misses its own targets. Taxpayers are charged interest calculated at the Bank of England base rate plus 4% (currently 7.75%), while HMRC is only liable for interest at 1% below the base rate. This disparity in penalties has sparked debate and calls for reform.
Some employees with multiple jobs have also reported long waits for refunds of overpaid National Insurance Contributions (NICs). Kabir Das, who works across different NHS departments, expected his refund last April but was told it would not be processed until September. University professor Linda Ashcombe, who holds two roles, is also overdue £1,000 since submitting her request in April, with HMRC's online tracker and call center agents unable to provide clarity on the delay.
HMRC has acknowledged the issue and promised to investigate all cases referred to it by Guardian Money. Since the publication, most affected individuals have received their refunds. HMRC has also committed to reducing wait times and investing £500 million in digital services to expedite refunds and improve tax payment accuracy, thereby reducing the need for refunds in the first place.
