Income Tax Self-Assessment (ITSA) repayment delays

05 November 2021

HM Revenue and Customs (HMRC) is still undergoing efforts to return to normal service levels following the pandemic and the increased workload of its initiatives. One of these areas has been the processing of ITSA repayments, with many expecting to be contacted still awaiting correspondence from HMRC.

Update on delays

Following the Compliance Reform Forum, HMRC has issued the below statement regarding the ITSA repayments:

“HMRC are currently undertaking an increased level of checks to stop criminals abusing our Income Tax Self-Assessment repayment systems. This means that unfortunately some of our legitimate repayment customers have been experiencing delays in receiving tax refunds.
We have significantly increased resources to minimise delays and expect to have brought our customer service levels back to normal by the end of November, at which point ITSA repayment related post will be actioned within 30 calendar days of receipt.

Further background

•    We must balance our commitment to good customer service with our vital role to protect public funds from criminal attack
•    Preventing these fraudulent repayment claims is a critical part of HMRC’s efforts to protect the public purse from the small minority seeking to abuse the system
•    We prioritise preventing these fraud attacks before repayments are made, so all claims for ITSA repayments are checked before any money is paid
•    Claims identified as a risk are suspended and subject to further checks by our compliance experts. If we’re satisfied the claim is genuine, the repayment will be released. If we are not, the claim will either be cancelled or amended to a lower value

Minimising the impact on all genuine customers is important to us. We recognise we are facing some significant challenges and that our current service performance to legitimate customers is not at an acceptable standard and have therefore deployed additional resources to help us get back on track.”

‘SURF’ letters

When a Self-Assessment tax return has been completed, and indicates that a repayment is due, HMRC will conduct routine checks to identify potentially fraudulent claims. Where HMRC identify a risk of a non-legitimate claim they will issue a verification letter requesting the individual contacts them. A small number of legitimate claims may receive these letters, if HMRC does not receive a reply they will not make payment.

The verification letters are referred to as ‘SURF’ letters. ‘SURF1’ will be sent in the first instance to request additional information about the claim, failure to reply will result in claim and the unique tax reference (UTR) being cancelled. The UTR is cancelled to ensure the reference is not used for future fraudulent claims across HMRC and the Department of Work and Pensions (DWP).

‘SURF2’ letters are issued to verify the identity of the individual, usually following contact made due to a ‘SURF1’ letter. It also requests the individual completes a payment questionnaire and form R38 to claim a refund. HMRC may, in some situations, send the ‘SURF2’ in the first instance to avoid delays.

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