Millions of taxpayers 'assessed wrongly': Revenue often at fault, watchdog says

Click to follow
More than 60 per cent of taxpayers who receive annual assessments from the Inland Revenue are assessed incorrectly, the National Audit Office has claimed.

In its study published yesterday, the public spending watchdog found that of the 5 million taxpayers who receive assessment forms, 3.2 million are not charged the correct amount initially.

Assessment forms are sent to schedule D taxpayers - mainly self-employed and freelance workers - and about a quarter of all schedule E taxpayers. Most errors occur because the forms are returned late or not at all. But in 500,000 cases, the mistakes are the fault of the Revenue.

Because of the errors, people are paying too much tax. Mistakes, concludes the NAO, rarely result in understatements. 'This confirms the importance of taxpayers checking assessments of tax due thoroughly; but it also underlines the need for the Inland Revenue to tighten up their checks and controls.'

So concerned is the Government about the inefficiency and high proportion of errors, the NAO reports, that 'the department have confirmed that they are already reviewing the existing arrangements and are to take action on this in 1994-95'.

Assessments should be more closely scrutinised before being sent out, and investment in higher technology might also improve accuracy, the report says.

Sometimes the mistake can be very simple but easily overlooked. In one example uncovered by the NAO, a taxpayer married for 36 years received a bill for pounds 1,683 in 1991-92. He discovered he was being awarded a single person's allowance - and within six days a new assessment reduced his tax to pounds 425.50.

Bureaucracy is often to blame. One taxpayer queried the absence of personal allowances in his assessment. Because he had more than one source of income, officials had to refer to another district. The whole exercise took 84 days, but this was within internal targets set by the Revenue: each tax office is allowed 28 days to deal with an item of correspondence.

The Inland Revenue has assured the NAO that it is making every effort to improve accuracy.