Five questions on: Incorrect tax demands

 

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The Independent Online

Don’t tell me the tax authorities have messed it up again?

Of course they have. The way HM Revenue & Customs calculates our tax these days means that millions of folk – about five million – will either be charged too little or too much, which has to be reclaimed or repaid for each tax year.

So how many is it this time?

HMRC has surpassed itself this time. It got its revised calculations wrong when contacting the five million who paid the wrong amount of tax, meaning that it is now contacting a number of them – said to be less than 100,000 – all over again.

Hang on. Does that mean 100,000 people will be sent a third tax calculation for the year?

It seems so. They will already have been contacted by HMRC to report that their tax was miscalculated for the 2013-14 year. Now it is sending out letters to those affected, telling them their recalculated tax was miscalculated.

What’s the excuse?

HMRC said the bulk of the errors happened when an employer had failed to make a final payment statement at the end of the 2013-14 tax year. It has promised to make things as easy as possible for anyone affected by its mistakes. If they have already spent a tax refund that was sent in error, for instance, HMRC will allow repayments to be collected in monthly instalments over the 2015-16 tax year and people can also request a longer period to repay the money.

Is that the end of the problems?

Of course not. HMRC is being given controversial powers to take cash straight from people’s bank accounts if they owe tax. That’s prompted serious questions from experts in light of the many mistakes it has made. “We are giving HMRC huge powers, yet they don’t have the ability to manage fairly simple matters,” warned accountant Mark Davies.

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