Compensation urged for errors by tax officers: Elizabeth Filkin urges the Revenue to be more friendly in its dealings with taxpayers

TAXPAYERS should receive compensation when the Inland Revenue has erred and caused prolonged distress, the first Revenue Adjudicator, Elizabeth Filkin, said this week when she presented her first report.

She said some financial token would help to heal the wound where the distress was long-term and intense.

Under present rules taxpayers can only be compensated for costs incurred. Some tax offices were found by the adjudicator to be interpreting the rule narrowly and checking every penny of every small claim.

In one case a taxpayer's father - a retired accountant - spent many hours sorting out problems. The adjudicator was only able to recommend payment of pounds 25 to cover direct costs and could not uphold the claim for pounds 450 to compensate him for the time and distress caused by the Revenue's errors.

In the first 11 months of operation to the end of March the adjudicator investigated 308 complaints. Of these 105 were settled - 65 wholly or partly in favour of the complainant and 36 wholly in favour of the Inland Revenue. Four were withdrawn.

Mistakes accounted for 26 per cent of complaints, the use of discretion a further 22 per cent. Other causes were delays and the attitude of Inland Revenue staff.

Compensation was paid in 29 cases, ranging from the highest single award of pounds 10,937 to the smallest of pounds 25.

The largest payment involved a threatened bankruptcy where a taxpayer with mental and drink problems had failed to deal with his affairs properly. He was held to share responsibility for the threatened bankruptcy with the Revenue and was awarded half the bankruptcy fees.

The adjudicator's office also helped 1,300 people who had not exhausted the Inland Revenue's internal complaints procedure. In 90 per cent of these cases the problem was resolved without the need for a full investigation by the office.

Ms Filkin said the Revenue should try to be more friendly and appreciate the difficulty taxpayers had in understanding the tax system and jargon.

'There is sometimes an inability to comprehend just how confusing and indeed frightening the Inland Revenue can seem to taxpayers,' she declared.

Some let ters of apology were begrudging, she said. The phrase, 'I am sorry you found it necessary to complain,' was widely used and some took it to be a slap on the wrist for complaining.

Revenue Adjudicator's Office, 3rd Floor, Haymarket House, 28 Haymarket, London SW1Y 4SP (071-930 2292).

(Photograph omitted)