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 197.

    Complex systems complicated taxes, makes this inevitable. Provide all with a very minimal state provided income, then get rid of ALL tax allowances and all benefits, then make one flat rate on ALL you earn. No special deals for any political gerrymandering, for the favoured 'deserving'. Always worth earning then.

  • rate this

    Comment number 196.

    None of this surprises me having seen first hand the process for producing and sending tax codes over my years at HMRC. Follow the advice of other posters, and complain, with your evidence if you believe you have been wronged. Also, NEVER THROW AWAY A PAYSLIP OR A P60 OR A P2 or any other tax document for that matter....

  • rate this

    Comment number 195.

    the Revenue always knows better and never makes a mistake, according to them."

    When supplied with the correct information on time they normally correct mistakes. But anyone holding two or more jobs or changes job frequently needs to tell HMRC quickly so they can ensure tax codes are correctly notified. Otherwise errors are inevitable.

  • rate this

    Comment number 194.


    Perhaps you have misunderstood. I pointed out the flaws in your earlier, very specific case study. That is all.

    What I'd prefer is people spend their time considering the source of problems, and solving them.

    You don't do that. You pick a popular target, propagate a rumour, then try to pass it off as irrelevant whether it's true or not.

  • rate this

    Comment number 193.

    " smartIgnoramus
    that HMRC are, funadmentally incompetent"

    That is not my experience, at least until recently (now it is very hard to get someone on the phone). Having given a very efficient money raising machine the remit to hand out benefits and merge with C&E then its role has been compromised. Then reducing staffing levels means it may not have the resources to fulfill the expanded mission.

  • rate this

    Comment number 192.

    Comment 181 - Spot On

    Taxation and Benefits should be simple to apply and collect. This would bring in more revenue if more difficult to dodge and level the playing field. Income tax is the bugbear as it is not the employee who pays it, but the employer, it is very simply a Tax on Jobs and something should replace it. If you don't believe me, try running a business. Simplicity is always cheaper

  • rate this

    Comment number 191.

    Since my tax payments appear to be higher than ever before, I can only hope that I will be receiving a cheque very soon. God knows, I could really use the money....

  • rate this

    Comment number 190.

    .Total Mass Retain...the Revenue always knows better and never makes a mistake, according to them. 50 million citizens know better !

  • rate this

    Comment number 189.

    #179.the gambler.
    What's dishonest is the myth that we have a perfect system that requires no change which you seem to be advocating, if you are so convinced all is well what are you wasting your time on HYS for .Poodle off into your ignorant bliss where all is well.

  • rate this

    Comment number 188.

    the global truth is, any government department run by public money, has the approach "we're government, we can do what we want, make you wait as long as we want, and make as many excuses as we want, and get it wrong as much as we want".

  • rate this

    Comment number 187.

    I hope they can sue for any losses occuring as a result of the error.

    Generally I have had good expreriences with HMRC. They gave me back £300 just before xmas last year.

    If people get the money they're owed, the problem is resolved and it's a short term, minotiry effecting issue then we can start moving on.

  • rate this

    Comment number 186.

    Is it only me who sees this as just plain ol' cost-shifting? Civil servants don't get commissioning their new computer system right, so Jo Public pays with uncertainty about his tax bills.

    Is it just beyond the civil service to get such IT procurement and implementation right? If so, why are they paid so much?

  • rate this

    Comment number 185.

    This only happens with services the STATE provide, if anybody else sold you something or provided a service, gave you a bill and then years later came back and said WE made a mistske and you owe us more we would be perfectly within our rights to decline payment.

    Why should the state be allowed to be so incompetant and get away with it?

  • rate this

    Comment number 184.

    183.Total Mass Retain

    While your comment is completely right, it does not exactly answer the point Tranman was making, which is that HMRC are, funadmentally incompetent (please refer to Post 99 for an example)

  • rate this

    Comment number 183.

    Yet another mess aranged by the civil service..blame the public, blame their computers, anyone but them."

    Who is more likely to know what the earnings of a taxpayer are at any point in time: the taxpayer themselves or civil servants and their computers?

  • rate this

    Comment number 182.

    "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?"

    The basics where? What evidence have you provided pertaining to your premise?

    I'd accept the conclusion if you could demonstrate the premise.

  • rate this

    Comment number 181.

    Time for genuine tax simplification in this country.

    How about this? 20% flat tax rate for all existing taxes:
    VAT - 20%
    Income Tax - 20%
    Corporation Tax - 20%
    Inheritance Tax - 20%
    Petrol Tax - 20%

    Get rid of all allowances, etc that allow rich people to avoid tax and have everyone on the same rate. Even HMRC should be able to cope with working out our tax then, as it is simply 20% of salary.

  • rate this

    Comment number 180.

    Yet another mess aranged by the civil service..blame the public, blame their computers, anyone but them. In the real world, they would be unemployable !

  • rate this

    Comment number 179.


    Oh by the way, I actually didn't compare you speculating to those smashing up shops - what I said was that your speculation feeds the fire.

    Just like when Glen Beck suggests people are undercover communists despite having no evidence, and suddenly some idiot shoots a congresswoman in the head at her rally.

    It's dishonest and irresponsible.

  • rate this

    Comment number 178.

    If we had a simplified, universal benefits and tax system (one where benefits are universal and not based on income or need, and one where tax is flat rate from 0-infinity) then you wouldn't get these descrepancies, and the cost of administering tax would be reduced by 99%


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