HMRC Email Forwarding

A faulty email forwarding system cost HMRC (or rather the public purse) £134,000. Are there any lessons to be learned?

HMRC has recently been barred from taking any further part in an appeal, following repeated failures to comply with tribunal directions. Moreover, the taxpayer was granted a summary victory, because HMRC had failed to present a case in defence of the appeal. 

Essentially, two operators (CKA and TAAG) were offering schemes that involved underpayment of PAYE and NICs. The taxpayer (CSE) was involved with TAAG but HMRC’s lawyers got confused and issued paperwork alleging that CSE had been involved with CKA. In the end the tribunal became so frustrated with trying to persuade HMRC to issue the correct paperwork that it simply allowed CSE’s appeal (an appeal that was unlikely to have been successful had the correct paperwork reached the tribunal – hence the £134,000 loss for taxpayers at large).

HMRC put forward two main excuses for its failures: 

• a wholesale change of personnel in its litigation team dealing with the CKA and TAAG appeals;
• and non-receipt by that team of emails from the tribunal. 

HMRC thinks it should be cut more slack in cases like this because public money is at stake. The Courts take the view that HMRC should, if anything, be given less leeway, precisely because they are responsible for collecting that public money. Anyway, HMRC’s excuses cut no ice and the appeal was allowed. 
It’s easy to see why a change of team might lead to paperwork going missing temporarily but why were emails not being received?

The tribunal said this: “At HMRC's request, the tribunal communicates with HMRC through what is known as their clearing house email. That email address acts as a central receiving point for all tribunal communications and ensures that HMRC can direct tribunal correspondence to the relevant case worker.” 
That statement bears some thinking about. The tribunal corresponds with HMRC about appeals all the time and it is at first sight sensible to allow the tribunal to use one email account, with presumably a case number to identify what the individual email is about. It would then be relatively simple to pass on these emails to the right mailbox: provided, of course, that HMRC monitors the email account and knows where to forward every email that comes in. It is not clear from the tribunal’s decision what exactly went wrong but it would be astonishing if HMRC didn’t monitor the email account at all. Far more likely is that emails with the relevant case number were either:

• forwarded to the wrong account (in which case, why didn’t somebody raise the alarm when the tone of the emails got serious?);
• or not forwarded at all, because the person monitoring the incoming tribunal account didn’t know where to send them. 

In an ideal world, both of these options could be expected to lead to some sort of corrective intervention but HMRC resources are limited and there are probably large numbers of messages flowing back and forth … Maybe the system is the wrong one, if it can’t deal with a fairly straightforward situation like this. And don’t forget this system is used “at HMRC’s request”, so it has chosen to operate a system it can’t manage in real life.

That is not the end of it, of course. We all know that it takes an age to elicit a response from HMRC about anything but if its handling of emails is subject to basic flaws, it’s no wonder that taxpayers and their agents are sticking to correspondence on paper as a better way of getting through to the right person. And considering how inefficient paper correspondence with HMRC can be, that’s really saying something.