Complaints lodged by taxpayers against HM Revenue & Customs have risen to their highest level in five years, and the proportion of cases resulting in compensation also recently reached a high.
New figures obtained by Contentious Tax Group under the Freedom of Information Act show HMRC received 93,589 complaints in the 2024/25 tax year, up from 78,542 in 2020/21, an increase of 19.2 per cent over five years.
The data suggests increasing frustration among taxpayers and advisers as the tax agency faces continued criticism over service standards, delays in processing and limited access to support.
The rise in complaints follows repeated warnings from regulators about falling performance levels at HMRC. In January 2025, the Public Accounts Committee said telephone response times, often seen as a measure of service quality, had continued to deteriorate from an all-time low recorded the previous year.
Professional advisers say operational deficiencies, including incorrect tax return notices, misapplied adjustments and processing backlogs, fuel a vicious cycle of errors and complaints.
Andrew Park, tax investigation partner at Price Bailey, speaking on behalf of the Contentious Tax Group, said the trend reflected the growing plight of taxpayers.
“HMRC is forced to accept that an increasing number of taxpayers are suffering worry and distress as a result of their actions or inaction,” he said.
“Every year thousands of people suffer financial loss, wasted time and unnecessary stress because HMRC struggles to ensure the basics.”
The increase in complaints was accompanied by a significant increase in compensation payments. The number of cases where HMRC made redress rose by 35 per cent, from 11,333 in 2020/21 to 15,304 in 2024/25.
During the same period, the proportion of complaints that resulted in compensation rose from 14.4 percent to 16.4 percent, the highest level in five years.
Of particular note is the increase in payments related to “worry and distress”, which reached almost 10,000 cases last year.
However, while more taxpayers are receiving compensation, the average payout has fallen. In 2024/25, the average reparation payment was £125.27, the lowest average over the entire five-year period.
“Most taxpayers complain simply to get mistakes corrected,” he said. “However, poor service can result in financial losses that dwarf the modest compensation HMRC is prepared to offer.”
Tax experts argue that complaints about service standards cannot be easily separated from substantive tax disputes. Errors in coding notices, delays in processing tax returns and system errors can directly lead to incorrect tax liabilities and additional financial burden for individuals and businesses.
“Operational deficiencies can be a leading cause of tax errors, leading to increasing complaint volumes,” Park said.
In many cases, taxpayers are forced to spend significant time or pay fees to resolve issues that arise from administrative errors rather than tax law disputes.
The Contentious Tax Group also raised concerns that HMRC’s ongoing push towards digitalisation could exacerbate the problem.
The tax authority has increasingly encouraged taxpayers to use online systems and automated services, positioning digital transformation as a long-term solution to resource constraints and performance challenges.
But critics warn that traditional support channels will be scaled back before digital alternatives are fully reliable.
“HMRC is pushing taxpayers towards digital systems that are not yet ready, while depriving people of the human support they still need,” Park said. “This is a combination that risks worsening operational difficulties and increasing complaints even further.”
As HMRC prepares for further reforms, including extending Making Tax Digital requirements to more groups of taxpayers, advisers fear complaint volumes could continue to rise if service capacity does not improve.
With almost 94,000 complaints lodged last year alone and compensation levels reaching their highest level in five years, the figures underline growing pressure on the UK tax authority to restore confidence in its service delivery.
