Tales of the Ombudsman

ALLISON PLAGER scans the Parliamentary Ombudsman's 2000-01 Annual Report.

The Parliamentary Ombudsman, Michael Buckley, has recently published his 2000-01 Annual Report. During the period, he received 1,721 new complaints, compared with 1,612 in 1999-2000. 1,787 complaints were settled, including 247 statutory investigations, and the typical time taken to complete an investigation is nine to ten months.

In his report, Michael Buckley referred to the internal complaints examiners used by some departments, including the revenue departments' Adjudicator, saying that inevitably, as they were a constitutional part of the organisations complained against, there would some complaints which he would be able to investigate that they could not. As a result, he felt that it was 'in everyone's interest that cases like that (and cases which, because of their size and complexity, are likely to come to me eventually) come to me sooner rather than later'. He felt that it was 'important that complainants should be given sufficient information to make an informed choice of which complaints route is best for them'.

Referring to his own department's work in reducing the time taken to investigate complaints, Michael Buckley commented that it was particularly 'unfortunate' if an internal complaints examiner took a long time to deal with a complaint, as it was difficult then for his office to carry out a full investigation, or even sometimes put the case outside the Ombudsman's jurisdiction because the time limit under section 6(3), Parliamentary Commissioner Act 1967 had been exceeded.

However, useful talks had been held with the Adjudicator and similar internal complaints examiners to consider these problems.

Complaints about the Revenue

During the year, the Ombudsman received 214 complaints against the Inland Revenue (including those against the Valuation Office Agency and the National Insurance Contributions Office). This is a substantial increase on the number received in 1999-2000, which was 134. However, this is partly explained by the fact that there was a rise in the number of complaints against the National Insurance Contributions Office, many of which related to the office's almost infamous new computer system, NIRS.

A number of complaints against the Inland Revenue concerned inevitably tax investigations and enquiries. One such complaint was made by Mr B who said that the Revenue had delayed and mishandled enquiries into the disposal of his company's business. He also complained that his subsequent complaint to the Adjudicator had been handled inadequately, and that he had incurred substantial costs which he felt should be reimbursed. The Ombudsman agreed that the Revenue should have concluded its investigation earlier than it did, and he also found that the Adjudicator's conclusions were partially flawed. As a result of the Ombudsman's findings, the Revenue agreed to offer Mr B a consolatory payment and to reimburse a substantial amount of his costs.

Another complaint also concerned Revenue delay in dealing with an investigation. In this instance, the Revenue assessed to capital gains tax the taxpayer's proceeds from the sale of a house which had been partly let. Eventually, the Revenue agreed that no such liability arose, but the taxpayer sought redress and reimbursement of the related costs. The Ombudsman, while not faulting the Revenue's initiating the investigation, found that there had been a lack of openness which led to the investigation being overly long, and unnecessary costs being incurred. The Revenue therefore increased its offer of an ex gratia payment by £1,450.

Test cases

Two complaints against the Revenue concerned what the taxpayers and their advisers perceived to be the application of the concept of 'test case'. The Ombudsman decided that in one case, the Revenue had not been at fault, but in the second case, while he concluded that the Revenue had not been at fault, the matters were considerably more complex.

The case concerned Mr N who participated in a tax avoidance scheme. The Revenue had said originally that another case, Commissioners of Inland Revenue v Plummer 54 TC 1 was to be a test case and would decide Mr N's case. The House of Lords decided for the taxpayer in Plummer, and the Revenue said that the decision would apply generally. However, a subsequent case, WT Ramsay Ltd v Commissioners of Inland Revenue 54 TC 101 established new principles which reflected on Mr N's case. Thus the Revenue refused to apply Plummer to Mr N. Eventually Mr N's case reached the House of Lords (Moodie v Commissioners of Inland Revenue [1993] STC 188). Their Lordships said that although Mr N's circumstances were indistinguishable from Plummer, they decided for the Revenue on the basis of Ramsay.

The Ombudsman said that there had been failings by the Revenue, and the then Adjudicator in her investigation, but said that these had not led to an injustice or that the Revenue had acted unfairly. Mr N's case had been overtaken by the Ramsay decision, and the Revenue could not be blamed for that.

Complaints code

The Revenue's Code of Practice, 'Mistakes by the Inland Revenue: Code of Practice 1', has been in existence for years. The Adjudicator is bound by the constraints of this, but the Ombudsman is not. He welcomes the existence of this Code of Practice, but is concerned about aspects of redress contained therein. In particular, the Ombudsman believes that in certain situations, the code is inadequate.

One instance concerned a complaint against the Valuations Office Agency where the taxpayer said that negotiations over the valuation of his former company had been unnecessarily long. The Revenue had reimbursed a substantial amount of the professional costs and personal expenses, but not with any interest despite the fact that the costs had been paid some years earlier. After the Ombudsman's intervention, the Revenue agreed to pay an additional £9,000 to cover the taxpayer's claim to interest. The Revenue explained, however, that under its Code of Practice, it normally only paid interest if the interest had actually been paid.

Customs

The Ombudsman was asked to consider a businessman's complaint concerning Customs sending in bailiffs to recover a debt which was not due. The episode with the bailiffs was conducted in the hearing of customers and employees. Customs had accepted fault and apologised, and paid a £100 consolatory payment, but after the involvement of the Ombudsman, they offered £750 as more satisfactory compensation.

More and faster

Overall, the Ombudsman reports that certain organisational changes have made the complaints process more streamlined and faster. The priorities for 2001-02 are to build upon this, and in brief 'to deal with more cases and to deal with them faster'.

The Ombudsman can be contacted at the Office of the Parliamentary Ombudsman, Millbank Tower, London SW1P 4QP, tel: 0845 015 4033, website: www.ombudsman.org.uk.

The Annual Report 2000-01 HC 5 costs £11.20, and is available from The Stationery Office.

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