The tax office is fielding 600 complaints a week as taxpayers are driven to their “wits end” by delays.
HM Revenue & Customs received close to 34,000 individual complaints last year from taxpayers regarding delays in how quickly their financial affairs were dealt with.
Despite officials at the tax authority dismissing almost 90pc of these complaints, it still upheld close to 4,500 – and paid out a total of £603,000 in compensation, figures obtained by The Telegraph show.
It comes amid increasing concern over a drop in standards at the tax office, with MPs accusing senior management of allowing service levels to fall to an “all-time low”.
HMRC caused a backlash last month after announcing plans to close its customer service phone line for six months of the year in a bid to push taxpayers online and divert staff to other areas of the tax office.
It was forced into a U-turn following an intervention from the Chancellor, although Jim Harra, HMRC’s chief executive, has not ruled out reintroducing such a move.
He told MPs of the Treasury Committee on Wednesday: “I am not saying we won’t return to this... it is part of our strategy and we do think it was effective last year [when a trial was carried out].”
HMRC has been routinely criticised for its poor customer service performance, with taxpayers forced to wait on average 24 minutes before they can speak to an adviser, according to its latest figures.
Last year, it created a special taskforce to deal with the backlog of correspondence and denied that workers answer fewer calls from home after it emerged that two in five workers at regional HMRC centres did not go into the office at all in the year to March.
It has consistently defended its work from home policy, denying any links in its performance issues to hybrid working patterns.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Taxpayers are at their wits’ end with the chaotic incompetence of the taxman.
“HMRC has the highly sensitive responsibility of collecting taxes, yet is veering from crisis to crisis, damaging confidence in their ability to fulfil their functions.
“Bosses need to urgently address the serious problems with staffing, productivity and financial management to rebuild trust with taxpayers.”
The complaints figures, obtained under a freedom of information request, show that in just three years total compensation given to taxpayers who successfully complained about delays has risen from £326,000 to £718,000.
In the same time period the number of so-called Tier 1 complaints about tardiness has risen from 14,596 to 33,838, with those being upheld rising from 1,957 to 4,433.
Over that period of time the most common payment made as compensation was just £50, although some claims were settled for more money which pushed the average amount higher.
Customers unhappy that their complaint has been rejected at Tier 1 can pursue the case to Tier 2. Over the last three years Tier 2 complaints have risen from 373 to 1,072, with the number upheld going from 129 to 309.
People who are still unhappy if their case has been rejected at Tier 2 are then forced to take their grievance outside HMRC and complain to an independent adjudicator and then finally an ombudsman.
An HMRC spokesperson said: “Complaints have fallen in the last few months as we adapt how we tackle backlogs as well as the other root causes of complaints.
“But we face increasing demand and that’s why we’re enhancing and expanding our digital services. These give customers quick and easy ways to manage their tax affairs, saving them having to wait on the phone.
“Our helpline advisers will always be there to support those who need that specific help.”
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