16 August 2010
Titles that covered this story include: the Financial Times, 14 August 2010; Telegraph, 14 August 2010; The Times, 14 August; Independent on Sunday, 15 August 2010; Mail on Sunday, 15 August 2010; and Telegraph 15 August 2010.
- Pensioners among the hardest hit
- HMRC estimates £3 billion PAYE repayments due
HM Revenue & Customs (HMRC) collected £238 million too much tax from taxpayers as a result of PAYE errors in 2009/10, up from £96 million in 2008/09 (a 148% increase) according to data obtained by our tax specialists.
Errors also lead to under collected tax of £132 million from other taxpayers in 2009/10 (£114 million in 2008/9).
Our tax specialists have seen an increase in inaccurate PAYE codes issued to taxpayers over the last 12 months.
Ordinarily, according to HMRC, each year approximately five million taxpayers receive a repayment or a bill because the incorrect amount of tax is collected through PAYE in previous years.
Our national tax group believe that the increased number of errors in PAYE codings recently is ironically due to glitches in a new HMRC computer system designed to make PAYE processing faster and more accurate, as well as a fall in the accuracy of manual processing by HMRC staff as they get used to new processes.
Rob Durrant-Walker, tax manager at our York office, comments: “Even though HMRC’s new system should lead to more accurate codes in future that can cope with increased job mobility, these figures are quite shocking. We have seen a steady increase in PAYE errors over the past year. For the amount of tax collected in error through PAYE to jump 148% in one year is simply unacceptable.”
“HMRC themselves estimate that there are nearly 8 million people due tax repayments, or who owe HMRC tax, for 2007/8 and previous tax years. This means around £3 billion has been overpaid, with £1.4 billion underpaid from PAYE taxpayers.”
“Taxpayers can overpay for a considerable period of time before they notice they are paying too much. On the other hand, if they pay too little this can create financial problems in later years when HMRC collects what can be a hefty tax bill.”
He adds: “Pensioners are particularly vulnerable to PAYE errors as they often have multiple sources of income. We have dealt with large numbers of pensioners on modest incomes who are owed money by HMRC due to processing errors. HMRC has all the information it needs in its records, so really has no excuse for getting it wrong.”
“HMRC is increasingly transferring more work between offices, so taxpayers are increasingly uncertain which offices handle their tax affairs. Sorting out the mess caused by these errors can be incredibly time-consuming.”
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