HMRC made us wait a year for 150,000 tax rebate

A probate delay led to inheritance tax being paid based on an inaccurate solicitor estimate. A rebate claim was confirmed by HMRC as owed 153,500, but payment took additional months, leaving an 86-year-old father short after using savings and selling a field. HMRC charges late payment with a 5% fine plus interest calculated using the Bank of England base rate plus 4%, while interest paid to claimants is 1% below the base rate. HMRC stated a handling error caused the delay, and a later case was resolved quickly after escalation. Another case involved a 13-month wait for a refund after HMRC registered a taxpayer for the wrong national insurance class, creating a large overpayment due to HMRC’s error.

"When my mother died, there was a four-year delay in achieving probate owing to financial complexities. During this time my father paid inheritance tax (IHT) on the advice of his solicitor, to prevent interest accruing. It turned out that the solicitor's estimate of the amount was wildly out. My father applied for a rebate a year ago and, eight months later, HMRC confirmed that he was owed 153,500. Two more months have passed without a word. My father is 86 and I do wonder if HMRC is hoping he will die before it has to pay."

"If we are 30 days late paying our tax dues, HMRC levies a 5% fine plus interest on the sum owed. When it owes us, however, it allows itself as long as it chooses, and that can be up to a year. Here's the wonder three days after I raised your father's case with HMRC he was called by a flesh-and-blood human and the money was paid into his account that afternoon, along with accrued interest. Note that the interest HMRC charges procrastinating taxpayers as well as the fine is the Bank of England base rate (now 3.75%) plus 4%. The interest it pays us if it is late is 1% below the base rate."

"HMRC blamed a handling error for the delay. I've never heard my father so jubilant, you say. It didn't happen here but HMRC insists cases are resolved with 15 working days. CK, who lives in Spain and works for a UK company, faced a 13-month wait for HMRC to refund an overpayment caused, in her case, by its own error. She had wanted to take advantage of last year's extended deadline to backpay national insurance (NI) and increase her state pension entitlement."

"When she tried to pay she discovered HMRC had her registered for the vastly more expensive class 3 NI contributions instead of class 2. Class 3 would cost me an unaffordable 180,000 compared to 3,000 for class 2, she writes. She alerted HMRC to the mix-up and received, after "

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