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."
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
Negotiable: Recruitment Genius: This company offers London's best photo booth ...
£25000 - £30000 per annum: Recruitment Genius: Domestic Gas Service Engineers ...
£50000 per annum: Recruitment Genius: This is an incredible opportunity for a ...
£16000 - £17000 per annum: Recruitment Genius: A Sales Administrator is requir...