More Cock Ups?

The Telegraph reports that there may be some more cock ups in the tax system, as a result of "issues" in HMRC.

The paper quotes Richard Mannion, a director of Smith & Williamson:

"The first problem concerns HMRC asking for tax repayments to be sent back and the second relates to online requests sent by taxpayers under the self assessment system which seem to have been lost by HMRC’s computer system.

In short, it appears that the tax authorities did not include the employee benefits as shown on forms P11D when working out if people had paid the correct amount of tax for 2009/10 and so under-estimated individuals' tax liabilities. Consequently thousands of people who got a refund just a short while ago could now get a tax demand to the tune of several hundred pounds or more."

With regard to the first issue, it is of course correct that if there has been an error wrt the repayment of tax then HMRC should reclaim it. However, human nature being what it is, it is highly likely that any monies paid back to taxpayers will have been spent.

HMRC, quite correctly, point out that this is the way the system works; ie where the benefit is new in 2009/10 the first HMRC knows about it is when the P11D is sent to them by the employer by July 2010. The issue should normally be "coded out" if less than £2K, and therefore no monies will be reclaimed in the form "hard cash".

However, the Telegraph (cynically?) notes that HMRC made similar statements, playing down the scale of its PAYE errors in August, before admitting to the massive scale of the problem.

These "reconciling" errors may well be more numerous than HMRC are admitting.

Mr Mannion then goes on to highlight another issue:

"The second issue concerns online requests for repayment or for the reduction of tax payments on account, sent by taxpayers to HMRC during the six weeks between October 1 and November 15 this year. It appears that any online requests for help of this type have been lost and not acted upon by HRMC.

Although the problem has now been fixed, anyone who falls into this category should get back in touch with HMRC and reissue their request. This applies even though you may have had a receipt from the tax authorities saying they got your request.

There could be thousands of people up and down the country who think they have successfully communicated their request to HMRC but in reality they will just have to do it again."

HMRC are of the view that this only a affects a few people.

Time, for both of these issues, will tell!

Tax does have to be taxing.

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