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Tax Error Taking Too Much from a Million People 2007-07-05

Posted by clype in Money.
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About one million people are paying the wrong amount of tax because of errors in processing by ‘HM Revenue & Customs’ (‘The HMRC’), ‘The National Audit Office'(‘The NAO’) said on Friday in its report to parliament entitled ‘Accuracy in Processing Income Tax’.

While ‘Income Tax’ is processed accurately in 95 percent of cases,  taxpayers are paying 32 million pounds too much to ‘The HMRC’ as a result of the mistakes.

‘The NAO’ found that the errors resulted in 125 million pounds too little being paid and 157 million pounds too much being paid during 2006/2007.

The errors have a much wider impact than monetary value though, ‘The NAO’ added, saying it resulted in taxpayers’ anxiety and wasted time and effort in trying to put matters right.

It also added to the department’s costs in having to rework cases.

Vulnerable groups such as pensioners are likely to be disproportionately affected, Sir John Bourn of ‘The NAO’ said, but others include taxpayers with complicated tax affairs, such as freelancers and people with several sources of income.

  • The average underpayment last year was 250 pounds while the average overpayment was about 290 pounds.

The major causes for the errors are the increased complexity of processing work as people change jobs more frequently.

Accuracy rates vary significantly across local offices, but the NAO acknowledged that ‘The HMRC’ projects to automate clerical processes have been successful in reducing levels of error.

‘The NAO’ recommended that ‘The HMRC’ separates out more complex cases for processing, develops staff training and strengthens the help available for taxpayers affected by errors. Sir John added:

‘HMRC has improved its processing of income tax returns but there are substantial numbers of taxpayers who are affected by processing errors.’

The Conservative & Unionist Party’s Shadow Chief Secretary Mr.Philip Hammond said the amounts involved were ‘unacceptable’.

‘With such a dismal track record, it “beggars belief” that “the Revenue” is asking for powers to deduct tax [that] it claims is owed — direct from bank accounts.’

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