Revenue Service backlog 'significantly worse than previously believed' with 106,444 cases outstanding
- Revenue Service faces 106,444 outstanding work items as of 31st August 2026, down 36% from a baseline of 166,543 established in March, but still representing a significant backlog accumulated over more than 12 years
- Failed transformation programme from 2018-2024 delivered new systems without finishing vital automation tasks, requiring 18 months to fix employer return processing and leaving finance and debt platforms incomplete
- Service has paid £2.73 million in supplements to taxpayers for delays between 2022 and 2026, with £817,021 paid in 2026 alone as the recovery programme clears repayment backlogs
- Staff turnover peaked at 13.3% in 2025 but has fallen to 2.5% in 2026, whilst headcount increased from 104 in 2024 to 118 in 2026 with only two current vacancies
- Complete historic backlog clearance expected by October 2028 without further investment
The Revenue Service has been operating with significant backlogs for more than 12 years, with the current position "significantly worse than previously believed," according to a comprehensive assessment published today.
The historic backlog could take until October 2028 to clear without additional investment in technology or resources, the report warns.
As of 31st August 2026, the Revenue Service faced 106,444 outstanding work items from a baseline of 166,543 established on 16th March 2026 — representing a 36% reduction over this period but highlighting the remaining challenge.
The breakdown of outstanding items includes 43,962 personal tax assessments (44% reduction from baseline), 36,749 corporate tax assessments (17% reduction), 22,950 income tax and contributions cases (35% reduction), 1,990 repayments from a May-July cohort, and 793 bereavement cases (48% reduction from baseline).
During the same recovery period, the Service received an additional 35,013 new work items falling outside the recovery backlog, demonstrating the ongoing challenge of addressing historic cases while managing current workload.
The Revenue Service has paid £2.73 million in supplements to taxpayers for late repayments or delayed processing between 2022 and 2026. The figure for 2026 to date stands at £817,021, reflecting the Recovery Programme's efforts to clear repayment backlogs. This compares to £448,630 in 2022, £631,107 in 2023, £467,117 in 2024, and £368,323 in 2025.
Chief Executive Boley Smillie stated: "There has been a backlog within the Revenue Service for more than 12 years. That is unacceptable, and the service provided over that period has too often fallen short of the standard people have every right to expect."
He acknowledged: "The figures in this report are higher than those previously reported. That is not because the position has suddenly worsened, but because under new leadership within the Revenue Service we now have a much better understanding of the scale of the challenge."
The previous Revenue Service Transformation Programme, which ran from 2018 to 2024, aimed to modernise the service by merging Income Tax and Social Security Contributions into a single function. However, Smillie acknowledged it "clearly fell well short of the target."
The programme delivered new core systems "without those systems being properly finished and able to do many of the vital tasks needed to automate tax and contributions processes."
Key unfinished elements included employer return processing, some contributions back-office processes, a finance and debt platform, document management migration, and automated corporate tax assessments.
Employer returns provide information used to allocate income tax deductions and social security contributions to individual taxpayer records. While functionality had been developed, testing revealed it wasn't sufficiently robust to manage real-world employer scenarios.
The Revenue Service paused automated personal tax return assessment for 2024 and 2025 returns filed online, requiring approximately 18 months of redesign, defect resolution and business validation before the process could operate reliably.
The new accounting and reconciliation system had been procured and substantially developed but not fully tested, deployed or embedded when the programme closed. The system introduced invoice-based liability and debt management, and implementation proved challenging alongside competing operational demands.
Independent Taxation, introduced in 2023, added 12,000 personal tax returns to the annual assessment process without corresponding resource increases. The change was implemented "largely due to inadequate impact assessment of such changes on existing operations."
Employers struggled with required changes, resulting in income and tax needing reallocation between taxpayer accounts. Until recently, functionality to efficiently correct these cases was unavailable.
The previous Transformation Programme sought headcount reductions before systems and processes were ready to support them, making backlog growth "almost inevitable."
Staff turnover peaked at 13.3% in 2025, though it has fallen to just 2.5% during January-August 2026. The proportion of leavers with less than 12 months' service reduced from 43% in 2025 to 33% in 2026.
Retirements and resignations removed significant technical knowledge from the organisation, with remaining staff carrying "increasing workloads, transformation activity and knowledge transfer at the same time."
Average headcount increased from 104 in 2024 to 106 in 2025 and 118 during January-August 2026. The Service created 14 fixed-term posts to support tax recovery activity. As of 14th September 2026, only two vacancies existed, representing 1.69% of the established workforce requirement.
Since the Recovery Programme began, the overall backlog has been reduced by more than one-third, with more than 60,000 pieces of outstanding work cleared. The Service has eliminated the cohort of repayments existing at the recovery programme start, reduced outstanding Income Tax and Contributions cases by approximately 35%, and almost halved the number of historic bereavement cases.
The Service has also restarted employer return processing and introduced automated corporate tax assessments.
The Service currently manages 4,320 credit balances worth approximately £4.53 million. Most are relatively recent, with 3,918 credits worth £3.85 million less than six months old. A further 402 credits worth £683,791 had been outstanding for more than twelve months. No credits are currently recorded as being more than two years old.
The Service estimates approximately 15% of personal tax assessments result in a credit balance. Since March 2026, the Revenue Service has issued 5,592 repayments.
The automation of corporate tax returns has recently been introduced, representing "an important milestone." Work continues to expand automation to additional return types, with full implementation expected by year-end.
The platform is described as technically stable and supporting live service delivery, with reliability, resilience and performance improving through 2026, though periods of reduced system availability have affected customers and operations.
Previously reported backlog figures were "inaccurate or incomparable over time," a key factor in pausing publication of backlog statistics on gov.gg while a more complete picture was established.
Former headline assessment percentages lacked context and didn't show how many returns awaited further customer information before processing.
The Revenue Service will publish updates on a four-weekly basis from 12th October at www.gov.gg/recovery.
On the failed transformation approach, Smillie reflected: "Looking back, I think it is fair to say that the ambition was right. The difficulty was trying to transform the Service while simultaneously asking it to continue operating at full pace."
Without further investment, complete recovery is expected by October 2028. However, Smillie emphasised this is "our current baseline estimate, based on the operation as it stands today, and our job is to bring that date forward."
The Recovery Programme includes projects to accelerate this timeline through digitising remaining paper returns, completing outstanding system functionality, and restoring currently disabled automation.
The Revenue Service is preparing a business case for the next phase of recovery activity for Policy & Resources consideration. Success depends on funding approval, availability of specialist resources, legislative and policy changes remaining within current tax reform proposal parameters, and associated additional resourcing being in place.
The Service does not currently commit to a universal processing target, stating it's not "prudent" until the Recovery Programme is further advanced. The longer-term objective is "delivery of a sustainable operation in which returns are processed within clear and predictable timescales, supported by improved data quality, increased automation and appropriately resourced operational processes."
Those waiting for assessments or repayments should not contact the Revenue Service, as this won't expedite processing. Work is processed in date order within each category. However, anyone experiencing financial difficulty or bereavement should contact the Service immediately, as such cases are considered separately from standard processing queues.
The Revenue Service is planning drop-in sessions for tax return help on Saturday 17th October at Vale Douzaine Room from 8am to 2pm, Wednesday 28th October at Vale Douzaine Room from 4pm to 8pm, and Saturday 31st October at Castel Douzaine Room from 8am to 2pm.
Filing online is emphasised as "the single most effective thing people can do to help," as online returns are processed more efficiently and can be pre-populated with previous year information. Registration and support are available at www.gov.gg/onlinetaxhelp, with returns submitted through my.gov.gg.
Despite processing delays, the majority of income tax is collected through the Employee Tax Instalment scheme (wage deductions by employers) and interim assessments (advance payments by those whose tax isn't collected by employers or pension providers). This means most customers awaiting final assessments have already paid owed tax, and the States can predict annual revenue.
Q&A
Q: How long will it take to clear the Revenue Service backlog?
A: Without further investment in technology or resources, complete recovery is expected by October 2028. However, the Revenue Service is preparing a business case to accelerate this timeline through digitising paper returns, completing outstanding system functionality, and restoring disabled automation.
Q: Should I contact the Revenue Service if I'm waiting for an assessment or repayment?
A: No, those waiting for assessments or repayments should not contact the Revenue Service as this won't expedite processing. Work is processed in date order within each category. However, anyone experiencing financial difficulty or bereavement should contact the Service immediately as such cases are considered separately.
Q: What caused the Revenue Service backlog to become so severe?
A: The backlog resulted from multiple factors including a failed transformation programme (2018-2024) that delivered unfinished systems, problems with employer return processing requiring 18 months to fix, introduction of Independent Taxation in 2023 adding 12,000 returns without extra resources, workforce reductions before systems were ready, and staff turnover that peaked at 13.3% in 2025.
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