HMRC backlog causes unprecedented delays in tax refunds for UK businesses and individuals
HM Revenue and Customs is receiving criticism for making individuals and small businesses wait over four months for tax refunds – a process that accountants recall used to take mere weeks.
The backlog is causing a stir among professionals, especially amidst escalating dissatisfaction with HMRC's service levels, which have drawn flak from MPs and raised alarms for Britain's beleaguered small enterprises.
Particularly affected are employers' PAYE and the Construction Industry Scheme (CIS), both of which involve businesses seeking to recoup excess tax and National Insurance payments.
Nikki Ainscough, managing director at York's Equilibrium Accountants, highlighted the plight of a client who overpaid on PAYE and has been told to hang tight until August for reimbursement, despite lodging the request in March.
"We are being told they are going to need to wait until August for the funds to be released, for a request we put in [in March]," Ainscough revealed.
An HMRC screenshot confirmed the grim forecast: "You can expect a reply by 22 August 2025", indicating the tax office is still sifting through requests from the previous December. Ainscough, with 12 years at the helm of her practice, expressed that such hold-ups were unheard of.
"I've never experienced this ... Why has it jumped so significantly?" she questioned. She suggested that the sizeable backlog hints at a large volume of claims and a potentially hefty sum owed to small businesses and individuals at a time when cash flow is paramount.
Even for self-assessment tax refunds – where the wait isn't as bad – HMRC has warned that payments may take up to 12 weeks longer than the expected date. One customer, who's supposed to get back over £1,000, might be twiddling their thumbs until September.
The crunch in HMRC's service levels appears to have been exacerbated by some staff participating in strikes, mainly those dealing with PAYE and CIS repayments, adding to the delay woes. An HMRC rep has owned up to the setbacks but was quick to reassure: "We're tackling response times for these refund claims by allocating extra staff to work on them."
They also boasted about a jump in customer satisfaction, saying: "We've made significant improvements to our customer service overall. Customer satisfaction stands at about 80%, and the funding settlement we have received means we'll be able to meet our service standards in 2025–26."
Meanwhile, small businesses are left reeling from HMRC's decision to pull the plug on its gratis online tax filing service. This blow means come April 2026, loads of little firms will have to fork out for commercial software to submit their corporation tax returns.
Standing by the decision, an HMRC spokesperson said: "This transitional service was introduced in 2015 to help small, unrepresented companies switch to online filing when there was a limited software market.
"It's right that we close this outdated support now that there's a range of commercial software which provides a much better service, and we've published guidance to help companies prepare for the change."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Rhyl Journal
10 minutes ago
- Rhyl Journal
HMRC issues £1354 Child Benefit warning for parents of teens
More than 509,000 parents of teenagers, who are staying in full-time education or approved training, have already extended their Child Benefit claim. A record-breaking 67% have done it online to guarantee their payments will continue in September. Parents need to extend their claim by 31 August or payments will automatically stop. Child Benefit is worth £26.05 per week - or £1,354.60 a year - for the eldest or only child and £17.25 per week - or £897 a year - for each additional child. HMRC has written to 1.5 million eligible parents reminding them to extend their Child Benefit claim for their 16 to 19-year-old. The quickest and easiest way to ensure payments continue is to extend via the HMRC app or online through the digital service. Parents can also scan the QR code in their reminder letter which will take them straight to the digital service. Are you missing out on childcare savings? 👋 Sign up for Tax-Free Childcare scheme and save up to £2,000 a year per child on approved childcare costs, including wraparound childcare. 💸 Find out more. 👇 Myrtle Lloyd, HMRC's Chief Customer Officer, says: 'Teenagers can be expensive and Child Benefit is an important source of income for your household. As soon as you know what your teen is doing in September, don't miss out. You can extend your claim in minutes through the HMRC app or online to ensure your payments continue.' Child Benefit can continue to be paid for young people who are studying full time in non-advanced education as well as unpaid approved training courses. Visit for a full list of approved courses. If either the claimant or their partner has an individual income of between £60,000 and £80,000, the higher earner will be subject to the High Income Child Benefit Charge. For families who fall into this category, the online Child Benefit tax calculator provides an estimate of how much benefit they will receive and what the charge may be. Recommended reading Families will soon have the option to use a new digital service to pay the charge directly through their PAYE tax code instead of filing a Self Assessment tax return. The new service will cut red tape for eligible employed parents who are liable to the charge. Those who choose to pay through their Self Assessment can continue to do so. Families who have previously opted out of Child Benefit payments can opt back in and restart their payments quickly and easily online or via the HMRC app.
Wales Online
4 hours ago
- Wales Online
HMRC warning to anyone who uses Vinted to sell clothes
HMRC warning to anyone who uses Vinted to sell clothes As more UK residents look to the likes of Etsy and Vinted to make some extra cash tax professionals are raising the alarm If you've been selling clothes or other bits on Vinted, eBay, or Etsy, HMRC is warning that they're now keeping a much closer eye on what you're earning. The tax office has put £40m into new resources to track down people avoiding tax and they're able to see more information from these selling platforms than ever before. Since January sites like Vinted have had to share data with HMRC if a seller makes more than 30 sales a year or if their total sales go over £1,700 in 12 months. That means if you're regularly selling, even just as a side hustle, your information could already be in HMRC's hands. Lee Murphy, who runs The Accountancy Partnership, said HMRC uses this data to check against people's tax records. For money-saving tips sign up to our Money newsletter here According to Lee if you're over the £1,000 trading allowance and haven't told them you might get a letter reminding you to file a tax return. If you ignore it you could be looking at a bigger investigation or even criminal action. Article continues below The good news is that if you're just selling your own old clothes or one-off items you're probably not at risk. HMRC is more interested in people making consistent sales and turning it into a proper business. But if you've gone over the £1,000 allowance or hit more than 30 sales in a year then you do need to declare it. Lee advised checking your sales history and keeping records of everything you've made plus any expenses like postage or packaging. Those costs can be deducted when you do your self-assessment, which could save you money. It's safe to say that it's better to stay on top of things now than get caught out later. HMRC isn't just bluffing with these warning letters and the fines can end up being bigger than the profit you made. If you're unsure how much tax you might owe there are free online calculators that can give you an idea of what you'd have to pay like this one at The Accountancy Partnership. Staying organised with your records is the safest way to avoid trouble and it'll give you peace of mind if HMRC ever does come calling. Article continues below
Leader Live
5 hours ago
- Leader Live
HMRC issues £1354 Child Benefit warning for parents of teens
More than 509,000 parents of teenagers, who are staying in full-time education or approved training, have already extended their Child Benefit claim. A record-breaking 67% have done it online to guarantee their payments will continue in September. Parents need to extend their claim by 31 August or payments will automatically stop. Child Benefit is worth £26.05 per week - or £1,354.60 a year - for the eldest or only child and £17.25 per week - or £897 a year - for each additional child. HMRC has written to 1.5 million eligible parents reminding them to extend their Child Benefit claim for their 16 to 19-year-old. The quickest and easiest way to ensure payments continue is to extend via the HMRC app or online through the digital service. Parents can also scan the QR code in their reminder letter which will take them straight to the digital service. Are you missing out on childcare savings? 👋 Sign up for Tax-Free Childcare scheme and save up to £2,000 a year per child on approved childcare costs, including wraparound childcare. 💸 Find out more. 👇 Myrtle Lloyd, HMRC's Chief Customer Officer, says: 'Teenagers can be expensive and Child Benefit is an important source of income for your household. As soon as you know what your teen is doing in September, don't miss out. You can extend your claim in minutes through the HMRC app or online to ensure your payments continue.' Child Benefit can continue to be paid for young people who are studying full time in non-advanced education as well as unpaid approved training courses. Visit for a full list of approved courses. If either the claimant or their partner has an individual income of between £60,000 and £80,000, the higher earner will be subject to the High Income Child Benefit Charge. For families who fall into this category, the online Child Benefit tax calculator provides an estimate of how much benefit they will receive and what the charge may be. Recommended reading Families will soon have the option to use a new digital service to pay the charge directly through their PAYE tax code instead of filing a Self Assessment tax return. The new service will cut red tape for eligible employed parents who are liable to the charge. Those who choose to pay through their Self Assessment can continue to do so. Families who have previously opted out of Child Benefit payments can opt back in and restart their payments quickly and easily online or via the HMRC app.
