What is HMRC costing us?

The original article was published in the April/May 2026 edition of HMRC Tax Investigations, Enquiries and Powers magazine.

Of all the reasonable excuse appeals I submit on behalf of my clients, I never thought I would be filing one on the basis that HMRC refused to accept delivery of the appeal.1

Our client had a deadline to file an appeal by 19 March 2026. We sent the appeal by courier the week before and when it got to HMRC, HMRC refused delivery. Really.

This is just one of the latest in a litany of administration issues caused by HMRC including (but not limited to) Tribunal cases where

• HMRC has withdrawn from the case two weeks before the hearing (Government Ministries MRC v HMRC [2026] UKFTT 00371 (TC))
• HMRC’s witness advised HMRC months before the hearing that they would not attend and yet the tribunal and the taxpayer only found this out at the hearing (David Witton v HMRC [2026] UKFTT 267 (TC)).

In Government Ministries, the taxpayer was awarded costs on the indemnity basis (i.e. all costs except those that HMRC can show are unreasonable) with a £400k payment on account – 50% of costs incurred. It is possible that HMRC will pay the full £800,000.

Compare this to the £1m penalty upheld for failure to abide by a STOP Notice (Countrywide Partners v HMRC [2026] UKFTT 357 (TC)) and it becomes clear that one failure in basic administration has cost HMRC almost the entirety of the penalty revenue, ignoring for a moment the cost of taking Countrywide Partners to Tribunal.

In Carbon Six Engineering Ltd v HMRC [2026] UKFTT 177 (TC), HMRC was barring from proceedings due to its failure to comply with an unless order. The unless order was made as a result of a series of administrative failures including providing an email address over a month late, failing to provide a statement of case and failing to comply with Tribunal directions.

Some of the reasons for the failures were that “HMRC entirely changed the legal team dealing with the [connected] group appeals on 5 August 2025. HMRC did not inform either the Appellant nor the Tribunal of the change. [The judge was] also told that there was an ineffective handover of the Appellant’s appeal and no specific instructions were given to the new team that it was not stayed behind either group. [The judge was] then told that because the directions were sent to the clearing house email address they had not been directed to the legal team dealing with the appeals. The directions were missed and HMRC did not comply. They did not respond to the Appellant’s applications.” Objectively, HMRC appears disorganised at best.

The judge also referred to “HMRC’s shambolic and haphazard conduct” as a reason for issuing the unless order in the first place.

Basic administration failures are costing HMRC a lot before we even get to technical matters.

The above cases are public and all took place in early 2026. How many cases fail on procedural grounds before getting a full hearing at Tribunal? Equally, how many unrepresented taxpayers are unable to ‘win’ cases because of lack of procedural knowledge? A quick search on the internet reveals a number of threads with people asking about delivery of post to HMRC and receipt of notices.

Tax awareness week was an educational initiative launched by the CIOT and ATT in March 2026 to increase “public understanding of tax obligations, the benefits of using a Chartered Tax Adviser, and the resources available, while showcasing the wide range of careers in taxation.” It should have also included ‘your rights’ and ‘HMRC’s obligations’.

The irony

It is somewhat ironic that when we talk about HMRC’s errors, sometimes we forget that the more errors HMRC makes, the fewer funds available for basic infrastructure and society in general.

Whilst our job as tax investigations specialists is to keep HMRC on the straight and narrow, sometimes it feels ‘sad’ that we are even needed. In an ideal world, the tax legislation would be unambiguous, HMRC’s interpretation would be unarguable and appeals would be dealt with even handedly. But it isn’t and they aren’t so here we are, probably to stay for a while.

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