Fury as HMRC delays force people to wait months for tax refunds

HM Revenue and Customs is under fire for leaving some individuals and small businesses waiting more than four months for tax refunds – delays that accountants say used to take just weeks. The backlog, described as unprecedented by professionals, comes at a time of growing frustration with HMRC’s service standards, which have prompted criticism from MPs and sparked concern among Britain’s hard-pressed small firms. The delays appear to hit employers’ PAYE and the Construction Industry Scheme (CIS) particularly hard – both affecting businesses trying to reclaim overpaid tax and National Insurance.

Nikki Ainscough, managing director of York-based Equilibrium Accountants, said one of her clients had overpaid PAYE and was being told to wait until August for the money – despite the request being submitted in March. “We are being told they are going to need to wait until August for the funds to be released, for a request we put in [in March],” she said.

A screenshot from HMRC confirmed: “You can expect a reply by 22 August 2025”, with the tax office still dealing with requests from December last year.

Ainscough, who has run her practice for 12 years, said delays like this were unheard of.

“I’ve never experienced this … Why has it jumped so significantly?” she said.

“If the backlog is that big, it suggests a high volume of claims and a potentially substantial sum of money that is owing to small businesses and individuals at a time when cashflows are critical.”

Even for self-assessment tax refunds – where delays are less severe – HMRC warned that payments could take up to 12 weeks after the official due date. One client due a refund of over £1,000 may be waiting until September.

It is understood that some HMRC staff responsible for PAYE and CIS refunds have been involved in industrial action, further compounding delays.

An HMRC spokesperson admitted delays but insisted: “We’re tackling response times for these refund claims by allocating extra staff to work on them.”

They added: “We’ve made significant improvements to our customer service overall. Customer satisfaction stands at about 80%, and the funding settlement we have received means we’ll be able to meet our service standards in 2025–26.”

Separately, businesses are reeling from HMRC’s decision to axe its free online tax filing service – a move that will force thousands of small firms to shell out for commercial software to file corporation tax returns from April 2026.

An HMRC spokesperson defended the change, saying: “This transitional service was introduced in 2015 to help small, unrepresented companies switch to online filing when there was a limited software market. It’s right that we close this outdated support now that there’s a range of commercial software which provides a much better service, and we’ve published guidance to help companies prepare for the change.”