Claiming interest for HMRC refund delays

ThrownOutTheAsylum

I can't find anywhere how, if at all, I can claim interest on a PAYE tax refund because HMRC took ages to process my request. Please can someone advise me?

Firstly, let me make clear that I'm not having a go at HMRC. I want to cut them some slack as I recognise that they were good to me when I made an error several years ago and have adjusted an error that my employer made when they could have been bloody-minded.

In short, I've finally completed a 15 month saga of getting alleged underpaid tax repaid after it was incorrectly taken from me. Throughout HMRC made a hash of things and even a complaint took 4 months to get things sorted. They made a small gesture (£25 IIRC) when I complained but their actions meant that they had several thousand pounds of my money for 15 months. HMRC haven't offered any interest and I think they ought to.

agrinnall

You could try asking them for the 'statutory interest' rate of 8% + BoE base rate. Let us know how you get on.

https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt

dori2o

HMRC do pay interest on repayments but only if the refund is issued after 31 January following the end of the tax year in question. This is the same for underpaid tax, no interest will be charged (currently at 3% p/a) until after 31 January following the end of the tax year in question.

It is generally referred to as Repayment Supplement . The current rate of RS is 0.5% per annum, and has been since September 2009.

ThrownOutTheAsylum

Thanks.

Doh, I had a few pence as Repayment Supplement but ignored it as some petty balancing figure because even 0.5% over the period of their delays is 10 times that. Now I've Googled it and spent a happy hour playing with numbers it's clear that HMRC's calculations are inappropriate (the words 'bureaucratic sleight of hand' came to mind but I decided to see it as unintentional). In essence, HMRC have allocated the incorrect deductions to the tax years in which they were made (2013/14 and 2014/5) not to the tax year they relate to (2012/13), thus giving 4 months at 0.5% on half the incorrectly deducted amounts not 15 months on the full amount.

The Repayment Supplement rules may be justified for run-of-the-mill adjustments but I think they shouldn't apply in my case where HMRC's actions have fallen well short of their standards, as they have agreed they have.

I'll ask them to give me, at the very least, interest at 0.5% on the money incorrectly taken based on the year they apply to, paid either as a Repayment Supplement or a gesture for the additional pain and effort of their dragging their feet.

Skint_yet_Again

some info here might help

http://www.hmrc.gov.uk/manuals/crgmanual/CRG5200.htm