Revenue `sorry' for doubling tax bills error

THE INLAND Revenue has been forced to apologise to hundreds of thousands of taxpayers after it effectively charged them double what they owed in tax assessments to be paid by this Sunday.

More than 800,000 self- employed taxpayers were sent tax statements on 27 Decemberthat appeared to demand their entire tax bill by 31 January. In fact, only half of the bill is due by that date.

On 5 January, the revenue informed tax agents the statements contained errors and promised to send apologies to all affected taxpayers. The error involved extra lines on the statements apparently demanding payments due for July by the end of January.

In a letter to tax agents, a revenue official issued a second apology, telling agents the revenue was "extremely sorry about this".

Officials added that because of the tight timetable, the flawed statements would have to go out as they were.

The letter says the problem has affected "around a quarter of statements issued".

Taxpayers are being asked to work out themselves how much they owe - in spite of the revenue's guarantee that it would do this for taxpayers if returns were submitted on time.

Chas Roy-Chowdry, senior technical officer at the Association of Chartered Certified Accountants, says: "These incorrect tax demands have sown endless confusion. The revenue made a simple mistake - they just doubled what taxpayers should owe.

"As far as most people are concerned, instead of paying pounds 1,000, they are being asked to pay pounds 2,000. In an economic downturn, when the self- employed are in hard times anyway, they still have to find funds which they hadn't been expecting to pay.

"This is the last straw for many of them."

Eileen Docherty, a London-based tax agent, said: "Whoever designed these tax statements should be shot. Even people in the revenue hate them: whenever you ring up they apologise and can't work it out themselves. And they invariably agree the statements are very poorly designed."

The apologies emerged as the revenue confirms it stands to net upwards of pounds 60m from taxpayers in fines for failing to get tax returns in by the deadline of midnight on Sunday.

Last year, more than 670,000 taxpayers missed the deadline, each attracting a fine of pounds 100. A further 400,000 missed the second deadline of 31 July, giving the revenue a windfall of approximately pounds 107m in fines.

Yesterday, only 7.24 million of the 9 million tax returns issued had been sent back to the revenue's offices, raising the likelihood of more than 100,000 fines this yea, equivalent to a further pounds 100m for the Revenue.

Tax returns will still be accepted if they have arrive at the revenue's offices by "first thing" on Monday.

This year's blunders follow a little-publicised but highly embarrassing mistake last year, when computer systems at the revenue, designed by the US computer giant EDS, confused debits and credits.

Tens of thousands of taxpayers faced demands for tax owing when they were due a refund, or the promise of a refund when they in fact owed tax.

Amid an outcry from tax agents, the revenue apologised and commissioned a report on how the problem occurred. Sources close to the revenue officials describe the report as "damning". But it has never been published.