Corporate report

Insight report: Guidance

Published 20 October 2025

This insight report is also referred to as a Level 3 report. In our Level 3 reports, we use insight and expertise to analyse specific themes and make recommendations to improve services for customers.

Background: Why this topic?

Complexity

HM Revenue and Customs (HMRC) has a clear brief to collect the money that pays for the UK’s public services and to provide financial support as determined by government and legislation.

Underneath that is a tax and benefits landscape that is vast and complex. HMRC’s wide-reaching and varied role means that it will interact with a broad cross-section of the public from young people receiving their first payslip, to retirees determining tax liabilities on their pensions.

Businesses from micro-enterprises to global household names interact with the UK’s complex tax system. At one end of the scale, the layperson seeking to understand a specific area of the tax or benefits system, potentially for the first and maybe the only time. That person is unlikely to have specific skills in that regard – and should not be expected to have them.

At the other end of the scale are businesses large and small (and sometimes huge) who have access to professional agents to help them navigate their responsibilities.

Our casework shows however, that regardless of the means you have to help you understand the tax system, you are likely to interact with guidance to help you navigate what is owed or what you are due in benefits.

How guidance works in practice

The amount of guidance HMRC has is vast. On GOV.UK alone (bearing in mind guidance also refers to in-house non-published guidance) we understand there are approximately:

• 9,000 guidance pages covering mainstream and specialist guidance for individuals and businesses.
• 80,000 pages of HMRC technical manuals, primarily for agents and tax professionals.
• 6,000 pages of interactive guidance, housed in just over 100 interactive guidance tools.

As we looked more deeply into HMRC’s guidance for this report, we saw some great examples of it sharing guidance in interesting ways. For example, HMRC are increasingly using educational platforms which are, essentially, guidance packaged for easy consumption: Help setting up and running a small business - GOV.UK.

HMRC are clearly trying to improve this crucial area, and we know many people within HMRC are doing their level best to make guidance better. The core issue as we see it is that the amount of guidance in use is overwhelming, meaning mistakes are common.

The challenge HMRC face

Our office sees two main challenges for HMRC when it comes to guidance:

1. Ensuring guidance is easy to understand for HMRC’s customers and its own staff.
2. Making sure the guidance itself is fit for purpose. By this we mean that the underlying intention of policy or legislation is clearly articulated through guidance.

There are also the challenges of the future for HMRC to consider. HMRC is keen to progress its digital agenda and move more services online. However, accessing and using online services requires trust in the service being delivered and the decisions being made.

Without human contact and interaction, trust can only be built by having systems people have faith in. HMRC’s Charter Standard ‘Getting Things Right’ says that HMRC will:

“Give you accurate, consistent, and clear information. This will help you meet your obligations and understand your rights and what you can claim.”

If HMRC want to expand and maximise their digital offer, then trust, delivered through good decision making and underpinned by quality guidance, is vital.

Executive Summary:

This report is informed by the cases we see. We have highlighted our findings under the relevant Charter standard:

Getting things right - in relation to clarity and ease of access.

1. Often guidance is complex, difficult to understand and can be misinterpreted. That can be as true for customers as it is HMRC’s own staff. An example of this is the concession ESC B41. Our insight work established that it had been deployed incorrectly for years by some HMRC staff, because it was mistakenly believed to apply to ‘non-statutory’ matters such as PAYE repayment requests.

2. Guidance can be inter-connected, meaning one piece of guidance says X, but to fully understand it as it relates to your circumstances, you may also need to understand Y and Z guidance. To complicate matters further, all of the guidance HMRC use is not always in the public domain. There are often good reasons for that – to prevent for example fraudulent activity – but it does make for additional complexity which we know can confuse our customers and we are not always sure why HMRC are not being transparent.

Making things easy - in relation to guidance not reflecting legislation or policy.

1. Guidance needs to reflect legislation and policy so that customers can know what their rights are. We have seen cases, for example when claiming out of date tax, where the guidance used does not accurately reflect all options open to customers.

*Treating you fairly** - virtually impossible to meet and/or not protecting customers.

1. For example, ESC A19, a concession relevant to HMRC giving up underpaid tax in the right circumstances. As HMRC’s systems have evolved, the ‘time-test’ element of the concession, where HMRC has a fixed amount of time to tell its customer about an underpayment, is virtually never met due to improved automation. What was relevant years ago is not now, but the concession remains in a format that is unlikely to help most people.

2. In relation to the High-Volume Repayment Agent (HVRA) complaints we saw, we found HMRC’s guidance was not robust enough to protect customers and HMRC from potentially fraudulent claims. It was also counter intuitive and restrictive.

Being responsive - HMRC not acting quickly enough to issues.

1. Issues with some HVRA’s first came to our office in 2023. It was apparent that guidance was not protecting customers. Guidance was not tightened until the end of 2024 despite our raising concerns many times in the intervening period. HMRC has acted fairly ultimately, but it took too long.

Case Studies:

This section provides a selection of case studies to highlight the issues we have identified as part of our investigations.

Extra Statutory Concession B41 (ESC B41):

A Pay As You Earn (PAYE) customer, who does not file a Self Assessment (SA) Return, has four years from the end of the tax year in which an overpayment arose to request (or claim) a refund. If a claim is not made within the statutory time limit, the tax year becomes ‘closed’.

Extra-Statutory Concession B41 allows HMRC to repay tax in years that are ‘closed’, providing certain conditions are met. ESC B41 is referred to within HMRC’s guidance at SACM10040. The concession says:

“repayments of tax will be made in respect of claims made outside the statutory time limit where an overpayment of tax has arisen because of an error by HMRC or another government department, and where there is no dispute or doubt as to the facts.”

However, the concession applies to ‘statutory claims’ such as a claim for relief in respect of trading losses. It does not cover the situation where someone simply claims a tax repayment late. For example, someone who has had too much tax deducted through their PAYE code number.

The wording of ESC B41 has meant that some HMRC staff refer to the concession incorrectly when dealing with out-of-date repayment requests. But it has also highlighted the lack of discretionary guidance for such requests.

Below are examples of issues we have seen in relation to the application of ESC B41.

Decision: Not Upheld - guidance unclear

In this case, the customer received a Payment Protection Insurance (PPI) repayment in the 2012-13 tax year that was subject to £809.94 in tax.

In 2023, the customer read that they might be able to claim their tax back. When they called HMRC on 18 September 2023, the adviser told the customer that the claim would likely not be accepted as it was for the 2012-13 tax year. But the customer was still told to submit the tax repayment claim.

During our investigation, HMRC told us that the phone advisor should not have told the customer to submit their claim and should instead have informed them that the claim was out of time, in line with their internal guidance. Whilst it is correct that the claim was legally out of time, it neglected the discretion HMRC has.

The guidance used by call handlers states that if the customer is claiming for an out-of-date year, the adviser should simply:

“tell the customer they cannot make a claim for an out-of-date year.”

However, this is inconsistent with HMRC’s Charter and HMRC’s ability to use discretion. HMRC’s guidance at SACM10040 goes into detail about what to do if a customer wants HMRC to allow a late ‘statutory’ claim. It says:

“If a person tries to make a late claim or election explain that they are out of time.

If the person wants HMRC to consider allowing them to make a late claim or election, ask them to explain why they did not make it in time and any reasons which they think HMRC should consider when deciding whether to accept a late claim or election.”

HMRC’s Charter under ‘getting things right’ says that HMRC will:

“give you accurate, consistent, and clear information. This will help you meet your obligations and understand your rights and what you can claim.”

Under ‘treating you fairly’ the Charter says HMRC will:

“work within the law to make sure everyone pays the right amount of tax and gets their benefits and other entitlements.”

If an HMRC advisor simply informs a customer that they cannot submit their refund request as it is out of date, without providing the customer the opportunity to explain to HMRC why they feel a ‘non-statutory’ tax repayment should be made for a ‘closed’ year, it is denying the customer the opportunity to have discretion considered. This is contrary to the Charter and is a significant barrier to building trust by being open and transparent.

Furthermore, what is interesting with this case is that the original advisor, in a manner of speaking, did give the right advice – to send in the repayment claim – though not necessarily understanding why. When it was escalated, HMRC’s position that the advisor made a mistake was, ironically, incorrect. But it demonstrates the challenge HMRC has interpreting its own guidance because of its inherent complexity.

Decision: Fully Upheld - guidance unclear

The customer had incorrectly been taxed on a State Pension that they had never received for the tax years 2010-11 to 2020-21. HMRC were able to refund from 2016-17 to 2020-21 but could not refund the earlier 5 years as the customer was out of time to make a claim.

During our investigation, we asked HMRC about their decision to refuse to repay the out-of-date years under ESC B41. In response, HMRC’s Policy Team told us that the Tier 1 and 2 complaint investigators were incorrect to refer to ESC B41 as a possible route to resolving the issue because the customer’s claim was ‘non-statutory’ and that meant the concession was not relevant.

HMRC looked for ways to remedy the situation but were unable to find one, leaving the customer significantly financially impacted.

Whilst the customer did not identify the issue with the overpaid tax, and it was not clear exactly what happened due to the passage of time, we found that a mistake in the coding of the State Pension likely lay with either HMRC or the Department for Work and Pensions (DWP). In addition to this, and significantly, the amounts taken were not tax owed, and therefore HMRC would not lose out by returning the money. The only detriment was to the customer who had incorrectly paid tax on income they never received.

To repay out of date years is exceptional (the time limits are set by parliament); however, during our investigation, HMRC identified a gap in their guidance about the use of discretion for late repayment requests and have now addressed this and cascaded the new guidance to their staff to help resolve similar cases in the future. HMRC also agreed that, in this exceptional case, and taking into account the customer’s personal circumstances, they would make the repayment for the out-of-date years.

What is a concern is that for years it seems HMRC have been using ESC B41 incorrectly because it only applies to ‘statutory’ claims. HMRC should be commended for now plugging that gap, but it perhaps demonstrates how complicated the guidance landscape is which allowed this to happen.

High Volume Repayment Agents:

We have seen a significant number of complaints relating to individual claims for repayment of tax. These complaints mostly relate to claims made by third parties on a customer’s behalf on P87 Forms (claims for income tax relief on employment expenses) and R40 Forms (claims for income tax deducted from savings and investments).

As the claims are submitted by a company acting on the customer’s behalf, the repayments, once processed are paid directly to the agent, with the customer receiving a percentage of the amount they are entitled to as the agent typically charges a (large) fee for their service.

Decision: Partially Upheld - guidance unclear

HMRC received an R40 claim on behalf of the customer from an agent. The claim form showed that the repayment should be made to the agent.

The form showed the customer’s name and signature as their birth name even though five years earlier the customer had informed HMRC of her married surname. When HMRC processed the form, it found that the name included did not match the PAYE tax record. As a result, HMRC updated the PAYE system with the name on the form and made a repayment of £209 to the agent.

The customer contacted HMRC’s personal tax helpline once they were made aware that a payment had been made to the agent. Because HMRC had changed the customer’s name on their system, they had to answer additional security questions to establish their identity and revert to the married name on their PAYE tax record. The customer also raised concerns as the repayment had been made to a company they had never heard of.

When we reviewed the customer’s complaint, we concluded that the customer did not make, nor consent to the R40. This is because the information included on the form was incorrect and the significant difference between the information provided and that held on HMRC’s records should have prompted further checks/enquiries. Despite this, we had to conclude that HMRC had followed its guidance but that was because the guidance allowed HMRC to process claims where there is a mismatch of information, such as a different name, as was the case here.

Issues/Weaknesses in HMRC’s guidance:

Our Service Level Agreement (SLA) says we should consider if HMRC has, amongst other things, followed guidance. In the case above, it had, so strictly speaking, we could not uphold the complaint. However, our SLA also says we should hold HMRC to account in relation to its Charter and we should use our insight to help HMRC improve.

We saw many cases like the one above where data did not match but guidance said this didn’t matter. The weight of similar cases should have alerted HMRC to flaws in its guidance that was leaving customer’s out of pocket and money paid to agents which should not have been. We also found, subsequently, that in many cases the repayment shouldn’t have been paid at all because, aside from the mis-matched data issue, there was no relevant repayment to claim. Which is probably one reason why the customer didn’t claim it in the first place.

HMRC routinely told customers to contact the Police or Action Fraud. We have not seen a case where that helped in any way; customers were generally referred back to HMRC. HMRC’s approach was unreasonable because the breach was due to HMRC’s processes, as articulated through its guidance, which were simply not good enough.

We discussed this issue with HMRC at length. By the end of 2024, and it is credit to the team we dealt with, guidance was significantly tightened and decisions by us upholding ‘mis-matched’ complaints were dealt with relatively quickly.

We also knew anecdotally that some HMRC staff processing these claims were uncomfortable about what was happening. HMRC is a huge Government Department, so it is understandable that processes and guidance are proscriptive. But the Charter should empower all HMRC people to do the right thing when it is obvious that guidance isn’t working.

A key theme in the Corporate Report on ‘building a trusted, modern tax administration system,’ is that HMRC needs to maintain the trust of both taxpayers and the wider public to achieve its vision of becoming a modern tax and customs department.

In this scenario, HMRC should have taken decisive action sooner to update their guidance to protect customers, the wider public and themselves from potentially fraudulent claims. Not doing so has had a significant impact on the level of trust customers place in HMRC and has led to reputational damage, evidenced through the comments made in the complaints we have received.

Tax Credits Withdrawals:

In the cases set out below, the customer has had their tax credits withdrawn by HMRC due to an ongoing ‘nil award.’ Customers are notified of the withdrawal of their tax credits by letter, and they have 30 days from the receipt of this to inform HMRC if they want their award to continue.

Decision: Not Upheld - ensuring guidance is easy to understand.

In this case, the customer was unhappy with HMRC’s decision to withdraw their claim for Tax Credits in April 2020. The customer did not believe that the withdrawal letter issued by HMRC satisfied the statutory requirements of the legislation, and therefore the withdrawal was invalid.

HMRC issued a withdrawal letter on 31 January 2020. The letter was sent to the customer because they had an ongoing Tax Credits claim with a nil award. The letter gave notice that the claim would close if the customer did not contact HMRC before 31 March 2020 to advise them that they wanted to renew their award. The customer did not respond to this letter, so their Tax Credits claim ended, as advised, on 5 April 2020.

The customer asked HMRC to explain how their withdrawal letter met their guidance at TCTM06106, which says that to be a ‘relevant notification’ the letter must be a written notification to a person or persons by whom a claim for tax credits was made which:

“advised that a reply to an s (section) 17 notice will not be treated as a claim made for the tax year following that to which the notice relates unless a relevant request is made”.

The customer’s view was that HMRC’s withdrawal letter did not meet the necessary requirements, as it explains the criteria for not renewing the claim, but it does not state, as it does in the guidance, that a reply to an s17 notice will not be treated as a claim made for the following tax year.

We did not uphold the complaint as we found that HMRC gave the customer clear notice of their intention to end the claim and the opportunity to challenge this if they did not agree or wished to renew their award.

However, we also found HMRC’s guidance on this issue to be incredibly difficult to follow.

Unclear guidance:

In our view, the guidance in place which the customer saw and referred to was not ‘operationalised.’ By this we mean that it did not explicitly set out what would happen and how this would be achieved clearly and accessibly.

The legislation says that to be a relevant notification the notice must “advise that this regulation will not have effect to treat the person or persons as making a claim for tax credit for the tax year following that to which the notice relates unless a relevant request is made.”

It would not be difficult to make this easy to follow. Essentially, and leaving aside the complex language in the legislation, the guidance needs to say that customers will be written to in good time and by the end of the current tax year they need to tell HMRC that they want to continue their tax credits claim. Ironically, HMRC are taking a pragmatic approach when writing to customers. It tends to send its letter around three months before the end of the tax year giving plenty of time for the customer to make a decision. The problem is the guidance is largely impenetrable.

Unclear guidance also makes it difficult for HMRC to explain and justify why they have taken a certain course of action. In this case, the customer was adamant that HMRC’s notification lacked a legal basis.

In response, HMRC provided the guidance relating to their actions, but could not operationalise this and be specific about what it meant in practice. This led to a standoff between the customer’s view of what the requirements were and HMRC’s, with neither able to convince the other that their approach was correct.

Extra Statutory Concession A19 (ESC A19):

If HMRC do not collect enough tax at the right time, this does not mean that the tax is not legally due. This is the case even if HMRC acknowledge that it made mistakes that led to an underpayment of tax. However, HMRC can consider giving up an underpayment if they have not made proper and timely use of information and certain conditions are met. These conditions are set out in ESC A19.

Decision: Partially Upheld - ensuring guidance is easy to understand/guidance unclear.

The customer contacted us to complain about an underpayment of tax for the 2019-20 tax year. They told us that HMRC failed to act on changes in their circumstances which caused the underpayment.

In this case HMRC assumed that the customer’s employment had ended when they began receiving their pensions. This was not the case as the customer continued to work. HMRC’s assumption meant that they did not issue a tax code to the employer for 2019-20 and they continued to operate a code which did not take the pensions into account. This duplicated the customer’s personal allowances, causing an underpayment.

We found that the underpayment occurred due to failures by HMRC. We also saw that initially the underpayment showed as outstanding on the customer’s Personal Tax Account, but this was later changed to show that they had paid the correct amount of tax and there was no debt outstanding. HMRC then failed to contact the customer to recover the underpayment for 3 years, which led the customer to believe that the underpayment had been written off.

When HMRC received a complaint from the customer’s MP, they deemed this to be a query about a Simple Assessment calculation and incorrectly referred this to their appeals team, despite the letter clearly stating that the customer wanted HMRC to not collect the debt. HMRC also said that it could not consider appealable matters under their complaints process.

We asked HMRC to consider ESC A19 as part of our investigation. HMRC did this and decided that they could not write off the underpayment as the ‘time test’ condition was not met. Following this, we asked HMRC whether they could apply broader use of discretion in all of the circumstances to write off the underpayment, which they agreed to do.

We recommended HMRC apologise and pay £200 redress to the customer for failing to consider ESC A19 during the complaints process and the impact that this had on them.

**The Criteria of ESC A19:

In the case above, the underpayments arose as a result of mistakes by HMRC. However, when HMRC considered ESC A19, they decided that the customer did not meet the criteria of the concession, namely the ‘time test’.

The cases we have seen demonstrate that it is almost impossible for the customer to meet the conditions of ESC A19 as in order to meet the ‘time test’, HMRC must have informed the customer about the tax owed more than 12 months after the end of the tax year in which they received the information indicating that more tax was due.

Effectively, ESC A19 gives HMRC a minimum of 12 months to identify their mistake, correct the position and communicate the underpayment to the customer. If they do, the customer has to repay the debt even though they may not have been the cause of or have contributed to the underpayment arising. With this safety net in place, which disproportionately favours HMRC, it is hard to see where the impetus to get things right is for HMRC.

It is also worth noting that we have seen many cases where the time-test was failed by the customer, so they cannot benefit from ESC A19, but the debt is chased, sometimes many years later. Often the customer is in a worse financial position by that point.

In an increasingly automated tax system, it will become harder and harder for customers to meet the concessions of ESC A19. The vast majority of cases fail ESC A19, especially under the time test. ESC A19 as a discretion made sense when automation was less complete as it is now. This makes ESC A19 largely redundant as a lever for discretion.

However, removing ESC A19 without replacing it with something else is not the answer. This report talks a lot about trust. Customers need to know that when things go wrong, HMRC will act reasonably. In doing so, trust is built in HMRC and the tax system. Therefore, as in the case study set out above, HMRC need to look at other means to give up underpayments that arise solely from its mistakes.

Our Findings:

The key themes identified in this report are:

• Guidance is not always clear and/or easy to understand – especially for those who are not tax trained, placing them at a disadvantage when engaging with HMRC.
• Guidance is not easy to find or is not in one place, meaning that important information is not directly available, leading to misinterpretation and incorrect application of guidance.
• Some guidance is almost impossible to meet or is favoured heavily towards HMRC. This reduces the need for HMRC to get things right and delivers unfair decisions where customers take responsibility for HMRC’s mistakes.
• Guidance is not a substitute for judgement and cannot cover all scenarios. As such, staff need to be empowered to raise concerns where their judgement suggests guidance is not right or is lacking.
• Guidance is not always customer focussed and does not take into account individual personal circumstances leading to potentially unfair decisions.
• Where weaknesses in guidance are identified, HMRC need to act sooner to make amendments and protect themselves and customers. Not doing so risks customer trust in HMRC and its ability to protect the public purse.
• Where operational decisions are made on how services are delivered, these need to reflect the guidance in place. Local decision-making and operational delivery decisions cannot bypass the intent and requirements of national guidance.

Good guidance is the foundation of delivering great customer service and ensuring that HMRC’s interactions with customers are fair and consistent. Customers need to be confident that HMRC’s decisions are based on guidance and that the guidance in place is fair, balanced, allows appropriate challenge and provides sufficient safeguards.

Whilst the challenge for HMRC is significant, we see real and tangible benefits to ensuring that clear and accessible guidance is in place for both customers and HMRC themselves. The most significant being increased trust in HMRC’s actions and decision making.

HMRC say that the Charter defines the level of service and the standards of behaviour that customers should expect. As such, when developing new guidance or amending existing guidance it should use the Charter standards as a way of ensuring that the guidance produced is customer focussed, accessible, clear, and most importantly correct.

If HMRC are to fully embed the Charter, then their guidance should reflect the standards to ensure that in all of its customer interactions, HMRC can get things right, make things easy, be responsive, treat customers fairly and take into account individual customer circumstances.

Recommendations:

We have identified 3 key recommendations from our investigations, these are:

1. HMRC should commit to considering all new guidance through the lens of the Charter and do the same when reviewing existing guidance. To ensure this happens, we recommend that part of that process includes documentary evidence of consideration of the Charter.

2. HMRC often has discretion to mitigate the impact of policy or legislation to ensure outcomes are fair. We know HMRC have taken steps to harness that discretion following feedback from us and other stakeholders. In relation to guidance, it should, where possible be ‘contained’ so that all elements, including HMRC’s discretion, are easily accessible for the people who use it. Related to this, HMRC should review how much guidance is not in the public domain and decide whether that should remain the case.

3. HMRC should look to set up a ‘task force’ responsible for taking swift and decisive action on areas of guidance that require urgent improvement. This will allow HMRC to protect themselves and customers from future threats and respond quickly and positively to improve customer service impacted by poor guidance. We regularly report to HMRC on issues we find and HMRC are open to improving those areas. A key consideration with any issue we raise, is the need for a related review of any relevant guidance.

This report highlights where HMRC can do better. But that does not detract from both the complexity of the landscape HMRC operate in nor its willingness, which we often see, to improve. Guidance is crucial to the smooth and fair running of the department. Tackling problems in this area will have significant benefits for HMRC and its customers and will, we believe, significantly increase trust in HMRC.

Whilst not a formal recommendation, it does seem to us that a key issue is the vast amount of guidance HMRC operate. Whilst it may appear a fanciful idea, if guidance was broadly the same for all areas it is meant to cover, in that the Charter are the rules plus local (simple) technical detail, it could potentially save the huge amount of bespoke guidance currently in play.

Finally, as part of our investigation, we looked at how other organisations use guidance. The NHS is a great example of what is in effect online guidance (for example Sciatica - NHS). The pages give an accessible over-view of the issue and broad advice, caveated as you would expect. Most people don’t need to know the technicalities of how to do surgery, much as most lay people don’t need to understand the complexities of legislation. As long as there is a link for those who do require or are interested in finding out more, most need the key information in an accessible format.

HMRC are starting to use this approach as discussed above. We encourage it to continue on this path.