Personal finance: Red faces at the Revenue

Some 800,000 incorrect tax demands have gone out

AS TOMORROW'S deadline looms for getting tax returns to the tax office, a spate of horror stories is emerging about an Inland Revenue mistake that led hundreds of thousands of people to be sent the wrong tax demands.

The Revenue has admitted that more than 800,000 taxpayers were issued with incorrect tax demands on 27 December. The demands, also known as assessments, appeared to require them to pay double the amount they owed by 31 January.

Ironically, the blunder was caused by an attempt to make it clearer to taxpayers how much they owed. The tax assessments set out the payments owing for the year 1998/99, rather than breaking them up into instalments. But in doing so, they failed to make it obvious that only half the amount was due for payment by the end of January.

The Revenue sent out a letter of apology soon after the blunder came to light, telling taxpayers that the assessment sent out in December might have been calculated by the wrong formula. The farce was compounded when the Revenue was forced to send out further letters of apology making it clear that only some - not all - of the assessments were wrong.

Tax agents are demanding that the Inland Revenue show flexibility about the demands and promises not to charge interest to taxpayers affected by the mistake.

The blunder is the latest in a series caused by the Revenue's new self- assessment system. At the same time a year ago, the Revenue's spanking new computer system issued upwards of 4 million tax demands. Tens of thousands of them incorporated a rather embarrassing mistake: the system had mistaken debits for credits - and vice versa. The assessments showed refunds due to people who owed tax, and charged people who were owed refunds.

The public's experience of the new system has exposed further absurdities.

Andrea Craig, a 39-year-old health care consultant from north London, was particularly conscientious when she discovered a Revenue error. Last year her office, London Provincial 10 in Gateshead, overlooked a line in her tax return specifying share options due to her. They issued her with a refund.

Knowing that she owed tax, Andrea contacted London Provincial 10, who admitted their error and said they would send her an amended tax demand before 31 January (so that she could pay in time).

Unfortunately, Andrea became fully self-employed shortly afterwards and her papers were sent to a King's Cross office. No amended demand was forthcoming.

"The next thing I knew was in February, when they sent me a new assessment saying I owed them money plus interest because I was overdue," she says. She filled out an appeal form, only to find herself called up by a Revenue official telling her she had "no reasonable grounds for appeal". Only months later, after writing to three senior managers and spending hours on the phone, did Andrea get an apology.

Last week we published an article on tax returns by Sara Williams along with extracts from her book, the `Lloyd's Bank Tax Guide'. The guide is available to readers of `The Independent' at a reduced price of pounds 5 inc p&p (normal retail price, pounds 7.99). To take advantage of the offer, please send a cheque for pounds 5 to Independent Reader Offer, Profile Books, 58a Hatton Garden, London EC1N 8LX

Start your day with The Independent, sign up for daily news emails
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
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: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before