Rebates spark taxation change calls

Calls for a simpler tax system were made today after it emerged that six million people are due a rebate of around £300.





HM Revenue and Customs (HMRC) is preparing to send out tax rebates totalling £2.5 billion between now and the end of next year, as it clears its backlog of pay as you earn (PAYE) open cases for the tax years 2003 to 2008.



Meanwhile, one million people will receive letters in the next few months notifying them that they have paid too little tax for the year 2010/11, with the average amount owed expected to be between £500 and £600.



Matthew Elliott, chief executive of pressure group the TaxPayers' Alliance, which campaigns for lower taxes, said: "Clearly the tax system is too taxing, even for the taxman.



"A simpler, fairer system could decrease mistakes like these and encourage economic growth.



"Until simplification happens, overly-complicated taxes will continue to be an administrative nightmare for HMRC and a confusing and overwhelming beast for taxpayers."



HMRC has carried out an annual check to make sure that the amount of tax and National Insurance deducted by employers matches its records.



A new IT system was brought in last year which made it easier to spot discrepancies and therefore more cases where people have over or underpaid came to light.



HMRC said there would always be under and overpayments in tax at the end of the year which are "part the PAYE system".



It said people may have changed their circumstances, and added: "This is not a 'blunder' and HMRC's IT systems are working as they should."



An HMRC spokesman said: "Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch.



"We are getting cases that were left unreconciled up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.



"The fact is there will always be some cases at the end of every tax year that require an under or overpayment to balance but these cases will reduce as the new system beds in."



The revenue's routine "reconciliation" sparked outrage last year when nearly six million people paid the wrong amount of income tax.



In March this year, the head of HMRC admitted the department needed to improve its customer service but said it was unlikely to be in a "good place" before 2013.



Mike Clasper, chairman of HMRC, told the Treasury sub-committee the two main areas which needed improving were customer service and staff engagement.



Mr Clasper told the committee the problems consumers have had in contacting HMRC stemmed from the fact that it was having to handle eight tax years in one year, rather than the usual three tax years in one year, following the introduction of the new IT system.



Chris Lee, a partner and business tax expert at James Cowper, said: "HMRC is working with a new IT system and it now appears a fact of life that the PAYE system will result in huge numbers of people paying the wrong amount of tax ...



"Companies who submit incorrect data, such as the wrong name, may cause real problems for their employees."



John Whiting, of the Chartered Institute of Taxation (CIOT), told the BBC such incidents were becoming a regular feature of the tax system.



"These are reconciliations, checks and cross-checks to make sure you have paid the right amount of tax," he said.

PA

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there