Millions more in line for tax rebates


The Treasury minister, David Gauke: "We are being sympathetic to those who have underpaid their tax, we're allowing them to pay that through the next financial year."

About six million people are set to receive tax rebates averaging £400, while another million will learn they have underpaid their tax by about £600.

Her Majesty's Revenue and Customs (HMRC) said letters would begin going out in the next few months, with those owing money able to pay in stages.

It is the second year tax and National Insurance discrepancies have been identified by a new computer system.

HMRC said the number of cases would reduce "as the new system beds in".

Those who will be told they have underpaid tax are expected to owe between £500 and £600 on average.

Interest paid

"In a similar exercise last year, Revenue and Customs were criticised for being insensitive over their treatment of underpayers," said BBC news correspondent John Andrew.

"This time it's being stressed that they can spread what they owe over time by having their tax code adjusted."

The rebates, which relate to overpayments in 2007-08 or earlier and will include interest, are due to be settled by December 2012.

It is estimated these will cost the government more than £2bn.

"Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch," said an HMRC spokesman.

"We are getting cases that were left unreconciled up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.

"The fact is there will always be some cases at the end of every tax year that require an under or overpayment to balance but these cases will reduce as the new system beds in."

MPs critical

Last year, HMRC identified 4.3 million people due refunds for overpayments and some 1.4 million who owed the taxman after paying too little.

Start Quote

These are reconciliations, checks and cross-checks to make sure you have paid the right amount of tax”

End Quote John Whiting CIOT

The amounts owed averaged just over £1,400, while a further 900,000 underpayments of up to £300 were written off.

The House of Commons Public Accounts Committee criticised HMRC's management of the income tax system.

The MPs said up to 22 million people had not been taxed accurately since 2004-05 causing "unacceptable uncertainty and inconvenience".

Then earlier this year, almost five million taxpayers were informed by HMRC that they had either paid too much - or too little - tax in the last financial year, 2010-11.

John Whiting of the Chartered Institute of Taxation (CIOT) said this was becoming a regular feature of the tax system.

"These are reconciliations, checks and cross-checks to make sure you have paid the right amount of tax," he said.

"Last year we had a great batch because they [the Revenue] hadn't done it for a few years.

"This year they are beginning to get into the swing of it," he added.

HMRC Permanent Secretary Dave Hartnett was widely criticised last year for a lack of sympathy towards those facing an unexpected bill, after he said tax reconciliation was a routine measure.

He later apologised and insisted HMRC did "not underestimate the distress caused to taxpayers".


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  • rate this

    Comment number 157.

    Surely this is a good reason to simplify the tax code? a simpler code means that more people will understand it, therefore meaning that they are more likely to pay the correct amount of tax, therefore saving everyone time and the taxman money

  • rate this

    Comment number 156.

    Oh goody! I’ll be able to afford that nice little tent, give up my bricks n mortar for an un-housed immigrant, and become a traveller. Off to look for No-Man’s land :) Hey ho, hey ho ... (6 million mistakes – that’s a lot!)

  • rate this

    Comment number 155.


    If, for example, the husband (say) is taxed at 40%, and the wife (say) is taxed at 20%, would you say that it is illegal, immoral, or both, for income from their savings to be paid to the wife, and taxed at 20%

  • rate this

    Comment number 154.

    Would this be the same John Whiting who was appointed by the Coalition to head up the Office of Tax Simplification - the same body that has decided not to recommend merging Income Tax and National Insurance?

    Vested interests?

  • rate this

    Comment number 153.

    Why is it when I owe the government money they send someone round to break my legs and take me to court but when they owe me money it takes at least a year to get here. Why can't I charge interest?

  • rate this

    Comment number 152.


    "Perhaps a little lobbying goes a long way!"

    Perhaps such speculation, repeated over and over again without a hint of evidence, is the reason people feel they have a right to smash up shops.

    A lie repeated often enough becomes the truth, as you can see.

  • rate this

    Comment number 151.


    I like where it says it will not be taxed as it will be paid to his wife who lives in Monaco. To anyones standards that is abusing the system - in the very least I would have expected this loophole to have been reviewed.

  • rate this

    Comment number 150.

    Tried the ESCA19 rule, which clearly applied according to my circumstances, but P60s from a PAYE taxpayer are not regarded as relevant information in Glasgow office, (although they are in Speke allegedly) Do what I did. Get your MP involved and go for adjudication. Oh and don't forget the poor sap on the phone at HMRC is not at fault, people at the top like Hartnett are.

  • rate this

    Comment number 149.

    If you get a demand for repayment, a lot of people on here are advising to query it. What's the betting they'll be straight down the bank to cash their cheque if they're given a rebate, no questions asked?!!

  • rate this

    Comment number 148.

    I dont think its fair to charge people the £600 underpaid when it was not their fualt."

    If HMRC don't get that tax back from the people who DO owe it, who should they get it from? People who DON'T owe it?

  • rate this

    Comment number 147.


    "He was shunned for it - but nothing reclaimed our of his £1.2billion salary."

    I'd be highly surprised if this was his salary, or anything close, actually. More importantly though, if what he did was a legal loophole as you say, why would you expect anything to be taken from him?

    You just seem a little surprised nothing was taken, just because he was shunned.

  • rate this

    Comment number 146.

    Some of the problem is down to the HMRC and mistakes, but we are all human and mistakes happen. Some of the problem, however, is down to the lack of knowledge of the way taxation works, so really it is six of one and half a dozen of the other!

    I agree with The_Gambler, basic economics, taxation and budgeting skills should be taught from a young age and kept up until the child leaves school.

  • rate this

    Comment number 145.


    Unfortunately the world isn't that simple. Monetary supply effects inflation.

    I'll put it another way, tomorrow EVERYONE is given £1m. Sounds great right? Until you go down the shop and can't buy a loaf of bread for less than £1000.

    Unfortunately your thinking (and no disrespect) is similar to the thinking that put us in recession... You can't fix something by just throwing money at it.

  • rate this

    Comment number 144.

    Yes it is true, because Vodaphone owed what HMRC claimed was £7bn. The company claimed they only owed £2bn. Hartnett has lunch with them, and they end up only paying £1bn. This is just one such case involving him. Add in the incompetent way he ran HMRC, plus the 107 dinners he had with HMRC "customers". You can see why MPs were not happy and one accused him of lying.

  • rate this

    Comment number 143.

    #138 The Gambler.
    "HMRC could have taken legal action, but didn't - perhaps they were wrong?"

    Perhaps a little lobbying goes a long way!

  • rate this

    Comment number 142.

    I apologise maybe 'evasion' was the wrong word. What I will say is that PG has abused a loophole in the system and avoided paying £millions of tax.

    He was shunned for it - but nothing reclaimed our of his £1.2billion salary. Oh instead he got a knighthood!!!

  • rate this

    Comment number 141.

    125.Colin Sutton
    Be careful if you are one of the six million....they might ask for it back in a few months!!
    + +
    Absolutely. I've heard reports of compounded mistakes and exactly this happening. You can't trust their systems but HMRC doggedly insist on money changing hands on every correction. They need to "rectify" their systems, if you see what I mean.

  • rate this

    Comment number 140.


    I agree, and I think we should have formal education in basic economics/budgeting/accounting/taxes in general from a much younger age than currently.

    And I'm not saying that because I'm a fellow Utd fan ;-)

  • rate this

    Comment number 139.

    To those who think it's simply wrong to argue with HMRC consider this. I queried my PAYE tax code 5 years ago, they insisted it was right. They saw all my P60s over 5 years, no queries made. Then suddenly they demand £19,100. Tried to apply rule ESC19, they change the rule. Pointed out they had my P60s, they claim P60s are no longer relevant. Go to adjudication, bill reduced to £4,100. COMPLAIN!

  • rate this

    Comment number 138.

    "Then the boss of HMRC has lunch with Vodaphone execs and they get excused £7bn in tax. I wonder why?"

    Except that's not quite true, is it? Vodafone disputed the tax bill, and this article suggests they could well have been correct to do so, eventually paying an agreed portion of the 'reported' bill.

    HMRC could have taken legal action, but didn't - perhaps they were wrong?


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