Problems at HMRC

HMRC are redesigning much of how we interact with them - especially for small businesses and freelancers. The 40+ announcements from last week included lots of proposals to change how and when tax is paid, as well as a comprehensive review of the customer experience for how a new small business is started. This is why it's essential small businesses provide feedback and input during the public consultations which are currently open until August, so government can hear what we think better looks like.

There is a difference between tax being complicated and dealing with HMRC being needlessly confusing. Too many people are asked to treat an unexpected tax-code change, an unclear calculation or a demand they do not understand as their own problem to unpick, while already running a business, caring for family or keeping up with rising costs.

The damage is bigger than frustration. When people cannot reach a human being, get a clear explanation or trust the figures are right, they start to see the tax system as something to fear rather than engage with. That is unhealthy for compliance and disastrous for confidence.

HMRC does not need complicated letters or another digital maze. It needs one joined-up, accountable system: plain-English explanations, a visible audit trail showing why a code or bill changed, fast access to a trained case handler and a proper route to correct mistakes before they escalate. Digital should make tax simpler, not make it harder to challenge a bad decision.

The system is broken, but the people inside it are often much better than the machinery they are forced to operate. When you finally get through to someone at HMRC, they can be helpful, pragmatic and keen to resolve the issue. The problem is getting to that point. Taxpayers are being battered by unexplained code changes, incorrect bills, long waits and letters that raise more questions than answers. That creates fear and distrust in a system most people are trying to comply with. HMRC does not just need another digital portal; it needs proper resourcing, clearer accountability and faster human routes for complex cases. A fair tax system should be efficient online, but not impossible to navigate when something goes wrong.

HMRC's relationship with the British public has quietly become one of the most strained in public services and the Government Gateway website is a significant factor for the frustration. What should be a straightforward portal for managing your tax affairs has become an obstacle course of forgotten passwords, error messages and circular login loops that would test the patience of a saint, let alone someone trying to check why their tax code has suddenly changed.

The trust issue runs deeper than a clunky website though. When letters arrive demanding tax that isn't owed, or codes change without explanation or notice, taxpayers are left chasing answers through phone lines that ring out and chatbots that don't. The average person has neither the time nor the knowledge to push back effectively, so many simply pay up or give up. Neither is acceptable.

Most wrong tax bills I see are not caused by complicated tax. They are caused by a figure the taxpayer is never shown. HMRC estimates the savings interest it expects you to earn, often from an account you closed a year ago, and quietly codes it out of your allowance. Your pay falls, and you have nothing to check it against. Last year 5.6 million people overpaid £3.5 billion through wrong codes, and HMRC need not warn you, refund you or apologise. You can be charged on a figure you cannot see, through a code you cannot appeal. There is a concession, A19, that cancels tax HMRC failed to act on, yet almost nobody is told it exists. What breaks trust is not the error, but a figure you cannot question and a remedy you are never offered. The answer is daylight, not another portal: every coding notice should show the income behind it and its source, name one person who can correct it, and refund automatically when the mistake was HMRC's. Get that right and most of these disputes never start.