HMRC criticised for time taken to process tax refunds

HMRC is under scrutiny for taking over four months to process tax refunds, a process that previously took just a few weeks. The delays are particularly affecting employers' PAYE refunds and the Construction Industry Scheme (CIS). It has faced criticism from MPs regarding long call-waiting times, increasing complexity in the tax system, and declining public trust.

Some HMRC staff working on PAYE and CIS refunds have been involved in industrial action, contributing to processing delays. Businesses and individuals are facing significant cash flow challenges as a result.

To make matters worse, HMRC is set to shut down its free online tax filing service by March 2026. Small businesses that relied on this tool will have to pay for third-party software, with costs ranging from monthly subscriptions to one-off purchases exceeding £100.

The tax office claims to be addressing response times by allocating more staff, citing an 80% customer satisfaction rate. It also defends the closure of the filing service by arguing that newer commercial software offers a better user experience.