Five million workers in chaos over their tax bill: Leaked memo reveals HMRC has sent wrong demands twice

More than five million working Britons face uncertainty today after HMRC admitted it has sent out incorrect tax bills for the second time in four months. In June HM Revenue & Customs revealed that 5.5million customers either paid too much or too little tax in 2013/14 by an average of £300. Most were sent new bills but a leaked email has revealed that some of these are also wrong and will be recalculated for a third time because of IT problems.

Last night, HMRC admitted it did not know exactly how many workers had been affected, but said it would be ‘well under 100,000’. The memo, sent to accountancy bodies and senior HMRC staff, admitted ‘thousands’ of mistakes had been made and that any workers who questioned their bills should ‘not to repay any underpayment’ of tax, the Daily Telegraph reported.

The miscalculations are thought to be partly due to employers not updating HMRC with changes to employees’ job status or pay rises quickly enough.
It is the latest embarrassment for the taxman which has been embroiled in a series of blunders in recent years.

Accountants expressed disbelief. Elaine Clark of the Cheapaccounting tax practice said: ‘This is extraordinary, a disaster, and heads need to roll at HMRC.’

At the end of every tax year in April, the taxman must work out whether workers in the Pay As You Earn (PAYE) system have paid the right amount of tax. Millions of people are over or under-charged every year and the government must then claw back the money by altering people’s tax codes for the next year or arrange repayments. A new £270 million system known as the ‘Real Time Information’ (RTI) programme was supposed to limit these errors by forcing employers to report the amount of money paid to staff on a more frequent weekly or monthly basis. This would ensure that changes to their employment status or wages were quickly altered on the database. However, the latest blunder shows there are still flaws in the system.

A spokesman for HMRC said: ‘The majority of the errors have happened because an employer failed to make a final payment statement for the 2013/14 tax year meaning our records were incomplete despite reminders that these submissions had to be made. ‘We are sorry this has happened and we aim to issue corrected calculations in the next few weeks.’ They said no one had been asked ‘for a penny’ as a result of the error and would receive a new statement within six to eight weeks.


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