UK (Parliament Politics Magazine) – HMRC faces backlash over delays in processing tax refunds, with some taking over four months, amid concerns over its online filing service shutdown.
As reported by The Guardian, HM Revenue and Customs has come under scrutiny for delays in processing tax refunds, with some taking more than four months, according to accountants.
The delays are happening alongside backlash against HMRC’s decision to close a free online filing service, used by several small enterprises. MPs have criticized HMRC in recent months for long call-waiting times, which now exceed 23 minutes, and the increasing complexity of the tax system.
According to the Public Accounts Committee, taxpayers’ trust in HMRC is declining, as the Making Tax Digital initiative has led to hundreds of millions in additional costs.
What did Nikki Ainscough say about HMRC’s tax refund delays?
Nikki Ainscough, managing director of Equilibrium Accountants, revealed that HMRC could take over four months to process tax and national insurance refunds for some businesses.
The reported delays seem to stem mainly from issues with the Pay As You Earn (PAYE) system and the Construction Industry Scheme (CIS), which requires contractors to deduct taxes for subcontractors in the building sector.
According to Ainscough, one of her clients is waiting for a substantial refund after overpayment on their PAYE bill.
She said,
“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].”
Ms Ainscough provided a screenshot showing HMRC’s reply, indicating a response by 22 August 2025, with requests from 10 December 2024 under review.
She has run her accountancy firm for over a decade and maintained that refunds usually took four to six weeks, questioning, “Why has it jumped so significantly?”
Ms Ainscough said,
“If the backlog is that big, it suggests a high volume of claims and a potentially substantial sum of money that is owing to small businesses and individuals at a time when cashflows are critical.”
Using HMRC’s website tool, Ms Ainscough was able to calculate when a client due a self-assessment refund exceeding £1,000 could receive it, after submitting a request on April 24.
According to the response, HMRC expects to issue refunds by 15 June 2025, with claims from 17 March. While this reflects a reduced backlog for self-assessment claims, it also noted that
“we may require an additional 12 weeks after 15 June 2025 to process your repayment.”
What did HMRC say about improving customer service?
An HMRC spokesperson stated,
“We’re tackling response times for these refund claims by allocating extra staff to work on them.”
The spokesperson added,
“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.”
HMRC claimed that the majority of refund applications are processed without the additional verification steps that could extend the wait by up to 12 weeks.
How will small traders cope without HMRC’s free filing tool?
Businesses are raising fresh concerns following HMRC’s recent announcement that it will shut down its free service for filing corporation tax documents by March 2026.
Small traders who rely on the free HMRC system for filing accounts and calculating corporation tax will soon need alternatives. HMRC argues that the tool no longer complies with digital requirements and recent legislative updates, meaning businesses will need to adopt external software from April.
One reader said,
“This means people will have to subscribe to a commercial, paid product for the privilege of paying corporation tax to the government.”
The reader stated,
“The online service was simple and fairly straightforward … It seems an incredibly retrograde step to withdraw it.”
What did Ainscough think about the shift to third-party tax software?
Ms Ainscough suggested that HMRC had made a clear decision not to invest in maintaining the software.
She pointed out that most individuals have already been forced into third-party software, with some firms exploiting the situation for profit, while others still offer good value for money.
How did HMRC respond to concerns about closing the free filing service?
An HMRC spokesperson stated,
“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.”