Hope for 900,000 as ministers opt not to chase £160m in lost taxes

Almost one million people have been granted a tax break of up to £300 as a result of the PAYE debacle, tax officials disclosed yesterday.

The decision not to chase 900,000 taxpayers for underpayments for the past two tax years will cost the public purse £160m, Her Majesty's Customs and Revenue (HMRC) admitted. It also said it would not charge interest on debts over £300, as it had intended.

Appearing before MPs on the Treasury select committee, the HMRC's head, Dave Hartnett, and its chief executive, Dame Lesley Strathie, admitted they did not know the cost of the gesture, which they said resulted from a ministerial diktat. The pair have been under pressure since HMRC announced two weeks ago that a new computer system capable of reconciling disparate pieces of PAYE information had identified 5.8 million people who had paid too little or too much tax between 2008 and 2010.

Between now and December, 4.3 million people will receive an average refund of £420 – a total of £1.8bn – while 1.45 million under-payers will be asked for an average of £1,380, a total of £2bn.

Before the announcement, HMRC had already decided not to chase anyone owing less than £300 (its usual discretionary limit for non-payment is £50), but had not divulged the number of people affected.

The Independent disclosed last week that in addition to the 5.8 million people who underpaid or overpaid after March 2008, the HMRC has a further 17.9 million unfinished or "open" PAYE cases from earlier years. Hundreds of extra workers are sifting through these older cases and HMRC admitted yesterday that it had no idea how much money was due or owed from them.

Mr Hartnett said he was sorry for his "insensitivity" on BBC Radio 4's Moneybox, when he refused to apologise for the debacle. He said: "I know how to apologise, I've had to do it before. I did not do it then and I am sorry for that."

Dame Lesley said: "It is very unfortunate that we have failed in this story to make the point that 4.5 million people are going to receive a cheque before Christmas."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
health
Sport
A view of today's Spanish papers
football
Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
Arts and Entertainment
Pink Floyd on stage at Live 8 in 2005. From left to right: David Gilmour, Roger Waters, Nick Mason and Rick Wright
music New album The Endless River set to overtake boyband for most pre-ordered of all-time
Arts and Entertainment
The last great picture - Winner 'Black and White' and overall 'Wildlife Photographer of the Year'
art
News
videoWatch Lynda Bellingham's tragic final Loose Women appearance
Arts and Entertainment
Benedict Cumberbatch films his performance as Smaug in The Hobbit: The Desolation of Smaug
film
News
people

Sport
nflAtlanta Falcons can't count and don't know what the UK looks like
News
i100
Arts and Entertainment
High notes, flat performance: Jake Bugg
music

Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat

News
The Putin automaton will go on sale next month in Germany
videoMusical Putin toy showing him annexing Crimea could sell for millions
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.

iJobs Job Widget
iJobs General

Norwegian Speaking Trainee Recruitment Consultant

£18000 per annum + competitive OTE: SThree: Progressive in Manchester is seeki...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Telecoms Engineer - Telecoms Administrator - London - £26,000

£26000 per annum + 25 days holiday & further benefits: Ashdown Group: Telecomm...

Year 3 Primary Teacher

£100 - £140 per day: Randstad Education Birmingham: We are seeking a confident...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London