Revenue to offer compensation for causing 'distress'

The Inland Revenue has announced a new Code of Practice (COP1) which will offer compensation of between £25 - £500 to taxpayers if it believes it has caused them inconvenience, irritation or distress through mistakes and delays.

COP1 states: 'When things go wrong we don't want to put you to extra time and expense. We will do our best to sort things out quickly and fairly, so we will say sorry, explain what went wrong and why, correct the mistake so your affairs will be in the same position as if we hadn't made the mistake and learn from our experience.

'If you have to pay any extra costs as a result of our mistake you can claim any reasonable costs which you have had to pay as a direct result. These might include the costs of postage, phone calls, travelling expenses, professional fees, financial charges, and interest on overpaid tax and National Insurance. If the extra costs have arisen because we took too long to deal with your affairs, you may not have to pay any interest normally charged on tax or National Insurance you owed, or we may pay you interest on money we owed you, during our unreasonable delay.

'Our mistakes and delays may cause you a great deal of inconvenience or irritation. We realise how upsetting this can be. If our actions have affected you particularly badly we may be able to pay you an amount of compensation to acknowledge and apologise for the way we have treated you. These payments, which are not intended to put a value on the distress you have suffered, will usually range from £25 to £500.'

For taxpayers still unhappy with the Revenue's proposed compensation arrangements, the next step is to refer their complaint to the Adjudicator, Dame Barbara Mills QC.

The Office of the Adjudicator advised the Revenue to pay a total of £481,612 to individuals and businesses for failed investigations and flaws in its enquiry work in August.

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Richard Powell, UKTECH