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 229.

    I was overpaying tax two years ago. Phoned the HMRC help line and they corrected the mistake, tax was refunded by cheque for the closed tax year, and through PAYE for current year.
    Took about ten minutes to sort out.

  • rate this

    Comment number 212.

    Regardless of the driving factors behind our taxation rates and who these apply to, how can anyone possibly be critical of a system that attempts to redress the balance and ensure only that taxes deemed payable are either collected or refunded?

    Imagine the reaction if it was announced HMRC has uncovered millions of over-payers but wasn't prepared to refund them!

  • 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 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

    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!


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