Personal finance: Millions lost to the tax moguls

Overcharging by the Revenue is unnoticed and goes uncorrected every year

TAXPAYERS STRUGGLING with tomorrow's deadline for tax payments might be comforted to know that someone, somewhere in the financial world, is standing up for the little guy. That champion of consumer rights, the Personal Investment Authority, has been flexing its muscles.

This week it was Liverpool Victoria, fined a record pounds 900,000 for serious and widespread failures to comply with the rules.

Two weeks ago, another regulator, Imro, fined Lloyds TSB pounds 425,000 for persistent poor management of its unit trusts. A large part of the problem was down to its computer system.

Right enough. But there are some quarters of the financial world which lurk out of reach of the regulatory machine. In this customer's hell, poor administration is widespread. Customers are frequently overcharged. They are never paid interest when they're owed money. And they're often forced into overdraft. What's more, it's all done with impunity. The culprits' actions affect our finances more intimately than any unit trust company. And yet they are never fined. In fact, they fine us.

Which brings us back to the Inland Revenue. The sins of Lloyds TSB have been repeated, almost to the letter, by the Revenue. Overcharging, to the tune of hundreds of millions of pounds, goes unnoticed and uncorrected every year. No interest is paid when they have incorrectly estimated your tax liability and take months to refund it, though officials will slap a surcharge plus interest on those of us who underestimate.

This week it emerged that the Revenue's bad admin had caused over 800,000 incorrect tax returns to be sent out. The returns were sent out as part of the Revenue's "guarantee", a promise to calculate the tax of those who got their forms in by September 31. The calculations were supposed to be with taxpayers before the end of January.

Unfortunately, when they arrived, they appeared to charge customers double the amount they owed. An apology letter followed, but customers had to work out, according to an obscure formula, how much they really owed. So much for the guarantee.

Last year, the Inland Revenue's tax statements were even worse - they confused credits with debits and vice versa. Thousands owed refunds by the Revenue were fined for non-payment. Red faces in Somerset House all round, and public apologies - but no one was punished.

It is not as if this is confined to the Revenue. MPs this week slammed the dodgy technology installed at the DSS to administer national insurance. NIERS2, the pounds 100m computer system installed by Andersen Consulting, had failed on no less than 1,919 counts. Over 17 million contributions had not been processed. Payments to private pension schemes had been delayed for months - costing scheme members some pounds 38m.

Compared to the private sector, the public part of the financial world runs wild. But a simple reform would do the trick: interest and surcharges for delays, and a pounds 100 fine for each cock-up.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'