£1.3bn in NI payments not credited to workers

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The Independent Online

Millions of workers have not been credited with nearly £1.3 billion paid in National Insurance contributions.

The tax authorities have not credited as many as nine million people over the last five years because of inaccuracies in forms filled out by employers.

The figures, obtained by MP Ian Liddell-Grainger who chairs the All Party Parliamentary Taxation Group, show that between 2004 and 2009 about 9.3 million National Insurance payments were not matched to worker records.

The inaccuracies have sparked fears that workers may have trouble when it comes to collecting their full basic state pension. The pension is awarded to those who have paid National Insurance for at least 30 years.

The Somerset West and Sedgemoor MP told the BBC: "These figures demonstrate why the coalition Government is right to bring forward proposals for real-time PAYE reform.

"However, the pace of change must not slow as we really do need a taxation system in the UK that is fit for purpose."

HM Revenue and Customs (HMRC) said each year it conducts a "deficiency notice exercise" where it contacts people who may have a discrepancy within their National Insurance contributions.

A spokesman said: "HMRC receives around 48 million P14 forms every year from employers, which detail the tax and national insurance paid by their employees.

"HMRC then matches these P14s to individuals' National Insurance records. In a small proportion of cases, we cannot match these records because employers provide insufficient details about their employees on the P14.

"We make every effort to match these records. However, where that's not possible, contributions are retained until such time as they can be matched. This is a normal part of the PAYE process."

An HMRC spokesman added: "No one will have a reduced pension. We write to people where we see there is a gap in their contributions and if they contact us to report a gap, we deal with the situation immediately. It is nonsense to suggest that millions of people lose out."

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