Just when you thought that HM Revenue and Customs’ (HMRC) tax problems were over, there has been further news this week that another million tax payers will be told that they have overpaid or underpaid tax after further tax code errors.
The Daily Telegraph reported that ‘the victims will join nearly six million people sent revised demands last year after a new computer system picked up on the errors dating back to 2008’.
5.7 million tax payers already affected
In late 2010, HMRC confessed to errors affecting a staggering 5.7 million taxpayers. These were mainly due to incorrect tax codes being applied to tax payers since 2008. Of these people, 1.4 million people had paid too little tax and faced a bill averaging almost £1,500. The remaining 4.3 million people received a tax refund averaging £419.
Since the original set of tax blunders, HMRC has been checking almost eighteen million cases over overpaid or underpaid tax from 2004 to 2008.
Now, a Government insider has told The Sun newspaper: “At least one million more will learn they too are on the wrong tax code. Some have overpaid and some have underpaid. It is another tax fiasco.”
Some tax debts written off as it is ‘too difficult’ to claim the cash
The Daily Telegraph reports that ‘it is understood that as many as two million people have had their tax debts written off – in a move costing £500 million – because it was “too difficult” to retrieve the cash.’
An HMRC spokesman told newspaper: “HMRC has committed to closing off old tax cases as quickly and accurately as possible. This means most people will get repayment cheques but a minority will have some tax to pay. This is only fair and will enable us to move forward to a more accurate and responsive tax system.”
If you owe tax, you have up to three years to make the repayment. If you owe less than £2,000 under the new demands, you will be given a new tax code between now and March 2011. Your repayments will then be taken each month for 12 months. If you owe more than £2,000, you have until 31 January, 2012 to pay a lump sum.
If you are set to receive tax, there has been no announcement on the timeline for the refunds of this money.
An HMRC spokeswoman said: “We are continuing our programme of resolving outstanding cases with improved accuracy.”
However, some MPs are angry about the continued tax mistakes. Liberal Democrat Treasury spokesman Matthew Oakeshott said: “HMRC just lurches from one crisis to the next. Any business that ran its affairs like this would have gone bust years ago.”