HM Revenue & Customs (HMRC) is facing criticism after a taxpayer was pursued for a capital gains tax (CGT) bill of £109,696.38, despite having already paid the amount nine months prior. The individual provided repeated evidence of payment, including a cheque that was cashed by HMRC, yet continued to receive demands and interest penalties.
Tax Payment Mishap
The issue began in November 2024 when the taxpayer calculated a CGT liability of approximately £109,000 from the sale of land. A declaration was made to HMRC on April 7, 2025, accompanied by a cheque for the full sum, which was cashed shortly after. However, when the taxpayer submitted their self-assessment tax return in October 2025, it was returned by HMRC requesting the CGT section be completed. The taxpayer resubmitted, including a copy of the original payment confirmation.
Around the beginning of 2026, the taxpayer started receiving substantial demands for outstanding CGT, totaling £107,505.05, along with a late payment fine of £5,375 in April. Attempts to resolve the discrepancy through HMRC's helpline proved futile, with callers being directed to an automated system offering only payment options.
Despite sending further letters with proof of payment, another demand for £109,696.38, including interest, was issued in May. It was at this point the taxpayer contacted Sally Hamilton of the Daily Mail's 'Sally Sorts It' column.
HMRC Investigation and Resolution
Hamilton's intervention prompted an investigation by HMRC. Within approximately ten days, inspectors identified the error and contacted the taxpayer directly. HMRC acknowledged the mistake, stating that the taxpayer had actually overpaid the original CGT bill by £2,047.64. This sum is now being refunded by cheque. HMRC also confirmed that the £5,375 late payment fine and £2,191 in interest charges have been cancelled.
A spokesperson for HMRC stated, "We apologise to him. We’ve confirmed that his account is up to date and sent him the refund he’s owed." The investigation revealed that the initial payment was not allocated correctly because the taxpayer had inadvertently quoted their National Insurance number incorrectly with the cheque. Although this was rectified soon after, the payment remained unallocated, leading to the penalty charges. HMRC offered no explanation for the continued demands or for ignoring the taxpayer's attempts to contact them.
Navigating HMRC Disputes
For taxpayers experiencing issues with HMRC, two primary avenues exist. Disagreements regarding the amount of tax charged should be addressed through an appeal, filed within 30 days of the decision. Complaints about HMRC's service, on the other hand, can be made online, by phone, or in writing. However, recent figures indicate a significant increase in the average response time for initial complaints, which stood at 40 days in 2025-26, up from 26.7 days in 2021-22.