When my mother died, there was a four-year delay in achieving probate owing to financial complexities. During this time my father paid inheritance tax (IHT) on the advice of his solicitor, to prevent interest accruing.
It turned out that the solicitor’s estimate of the amount was wildly out.
My father applied for a rebate a year ago and, eight months later, HMRC confirmed that he was owed £153,500. Two more months have passed without a word. My father is 86 and I do wonder if HMRC is hoping he will die before it has to pay.
He used all his savings, and had to sell a field to pay the tax he thought he owed, and it’s left him very short of money.
CJ, Bristol
If we are 30 days late paying our tax dues, HMRC levies a 5% fine plus interest on the sum owed. When it owes us, however, it allows itself as long as it chooses, and that can be up to a year.
Here’s the wonder – three days after I raised your father’s case with HMRC he was called by a flesh-and-blood human and the money was paid into his account that afternoon, along with accrued interest.
Note that the interest HMRC charges procrastinating taxpayers – as well as the fine – is the Bank of England base rate (now 3.75%) plus 4%. The interest it pays us if it is late is 1% below the base rate.
HMRC blamed a “handling error” for the delay.
“I’ve never heard my father so jubilant,” you say. It didn’t happen here but HMRC insists cases are resolved with 15 working days.
CK, who lives in Spain and works for a UK company, faced a 13-month wait for HMRC to refund an overpayment caused, in her case, by its own error.
She had wanted to take advantage of last year’s extended deadline to backpay national insurance (NI) and increase her state pension entitlement. When she tried to pay she discovered HMRC had her registered for the vastly more expensive class 3 NI contributions instead of class 2.
“Class 3 would cost me an unaffordable £180,000 compared to £3,000 for class 2,” she writes.
She alerted HMRC to the mix-up and received, after a five-month wait, a calculation still based on class 3 and an order to pay within a week, or forfeit the opportunity.
“Panicked about the deadline, I emptied my savings to pay the maximum amount I could – more than £8,000,” she writes.
HMRC later admitted it had made a mistake, that she was eligible for the lesser class 2 contributions and that she was due a refund of £5,094.
That was in October 2025, and it was the last she heard. When she called for an update in March, she was told she could expect her refund this November.
“My employer is cutting the workforce by a quarter this year and I’ve used all my savings on this overpayment,” she says.
HMRC claims the refund was processed before I questioned her botched case, and congratulated itself on being so well ahead of its estimated November deadline.
In fact, it approved the payment on the day I got in touch and the cheque reached you three weeks later.
HMRC admits that the government has told it to get its act together; it has recruited hundreds of extra staff to improve response times.
NS, who lives in Poland, has the opposite problem. He has been trying for a year to pay up to £10,000 in voluntary NI contributions. The forms he submitted met with silence.
“I was told they were a very small team who were still dealing with cases from 14 months previously and I might have to wait up to a year for a calculation,” he says.
“It seems crazy to have people willing to pay millions overall into the UK ‘pot’ but not have the resources, or staff, to facilitate receiving this money.”
The “vast majority” of contributions are processed in five working days, HMRC tells me unhelpfully.
It blames a surge in applications before last year’s deadline for the delays, and has now issued him with a calculation and a redress payment.
Finally, a happy ending …
JI, 83, who we featured in January, has, this week, received £63,872 of overpaid tax she applied for in April last year. That’s five months after I raised her case with HMRC.
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