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
    +1

    Comment number 177.

    #152 The Gambler.
    The basics here are that some are more equal than others regarding tax affairs and this is generally a function of how rich they are or how many accountants are backing them up.
    This is injust would you agree?

  • rate this
    +1

    Comment number 176.

    "Tax doesn't have to be taxing."

    If HMRC can't get it right, what hope have we got?

  • rate this
    +2

    Comment number 175.

    I suggest they find the computer programmer and testers of the system and take the money out of their salaries.
    ------

    He's away back to India.
    The other guy is away back to Poland and the guy after him is away back to Russia.

  • rate this
    0

    Comment number 174.

    Paying the right tax? Best chance if you're PAYE, all others depends just exactly what the accountant advises..............

  • rate this
    0

    Comment number 173.

    Since this is PAYE there is no excuse for errors. I suggest they find the computer programmer and testers of the system and take the money out of their salaries.

  • rate this
    -1

    Comment number 172.

    169.pitchforksout

    "Just like you then unless you know something we don't?
    My your buttons are easily pressed sir.Wait for it folks now comes the vitriol, hee hee."

    You appear to have forgotten the principle of innocent until proven guilty, along with basic intellectual honesty.

    I don't think pointing out your flaws is particularly vitriolic...perhaps the truth hurts?

  • rate this
    0

    Comment number 171.

    165.Justin150

    Thank you for your comment, but I hope you won't mind if I say that I was rather hoping Carianne would reply. However, they are being a little shy right now.

    Yes, obviously, such savings would have to be in the possession of the wife, and I'm sorry this seems to be a leap of faith too far for you (although I suspect/hope your comment was tongue in cheek!!!)

  • rate this
    0

    Comment number 170.

    167.Total Mass Retain

    Everybody's an armchair doctor, economist and politician.

  • rate this
    0

    Comment number 169.

    #166 the gambler.
    "It's not questioning the state; it's false accusation. Please don't romanticise the fact that you can't be bothered to follow the facts, so choose instead to speculate on what you've already decided happened."

    Just like you then unless you know something we don't?
    My your buttons are easily pressed sir.Wait for it folks now comes the vitriol, hee hee.

  • rate this
    0

    Comment number 168.

    A good news letter would be nice. Any reduction in my £2000 current estimate of the amount PAYE failed to collect from me would be most welcome before January..

  • rate this
    +4

    Comment number 167.

    What I find interesting is that people who admit to finding their tax affairs confusing think they should be able to determine whether the UK would be better off in or out of the EU.

  • rate this
    0

    Comment number 166.

    163.pitchforksout

    "Without speculation the truth is dust in the wind. Criminals smash up shops and comparing those who question the state to these individuals is pretty low"

    It's not questioning the state; it's false accusation. Please don't romanticise the fact that you can't be bothered to follow the facts, so choose instead to speculate on what you've already decided happened.

  • rate this
    +2

    Comment number 165.

    #155 the husband would have to give his savings to his wife (not something I would do!) but if he did so I would regard your example as both legal and moral. We are allowed to arrange our affairs within the law to pay less tax. If the law is wrong that is the fault of HMRC and parliament, not the fault of taxpayers

  • rate this
    0

    Comment number 164.

    Good luck everybody!

    Well you've probably got a better chance of getting some from this than the lottery...

  • rate this
    +2

    Comment number 163.

    #152 .The Gambler.
    "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."

    Without speculation the truth is dust in the wind. Criminals smash up shops and comparing those who question the state to these individuals is pretty low.

  • rate this
    0

    Comment number 162.

    Non-news but it will only get more expensive to get the information correct in future because of turnover in the low paid sector. Quite unfair because the low paid have little enough money to play with anyway and it would be better spent than held by the revenue?

  • rate this
    0

    Comment number 161.

    #151 it is not abuse it is simply the correct application of 2 basic principles of UK tax law. 1) we do not charge tax on non UK residents who receive dividends from UK companies and 2) a husband and wife are separate people for tax purposes.
    The second rule has been law for 25 years or so. HMRC have litigated and lost cases where husband paid low salary and large dividends to wife

  • rate this
    0

    Comment number 160.

    I'm confused; if people haven't been taxed correctly since 04-05, they are not legally allowed to reclaim it are they? I was under the impression that any balance owed becomes statute barred when it becomes 6 years old.

  • rate this
    -1

    Comment number 159.

    THis has always happened. We were PAYE for over 40 years and often ended the year with over or underpayment. Left for France while the dept was undergoing major change - couldn't sort out anything. Glad new system is rectifying the errors made over last few years, but reconciliations are nothing new. In France we pay 3 times per year, all via internet, much simpler. PAYE causes many probs.

  • rate this
    0

    Comment number 158.

    151.Carianne

    "I like where it says it will not be taxed as it will be paid to his wife who lives in Monaco."

    Sure if you want to see it that way...but as I said, he wasn't paid a salary of 1.2bn - he paid the shareholders (his wife) a dividend in the form of a loan to the business over 7 and a half years.

    And it's her money - the firm still pays corporation tax and all the rest.

 

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