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Tax Tip

HMRC blunder: Five million UK workers face wrongly calculated tax bills

More than five million British workers face uncertainty after leaked emails revealed that their tax bills for last year may have been wrongly calculated.

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“Many have already been sent new tax demands or sent repayments - but now face the prospect of having their bills recalculated once again. HMRC has stopped sending repayments until the problem is resolved.”

Four months ago, HM Revenue & Customs admitted it had collected the wrong amount of tax from more than five million people in the 12 months to April 2014. Since then, the taxman has sent those affected notification letters explaining how it would claw back or issue refunds for on average £300.

Whistleblowers behind the leaked email said the numbers affected by the latest blunder could "easily run into the hundreds of thousands".

HM Revenue & Customs insisted less than 100,000 people were likely to have been hit, but was unable to be more specific.

Stuart continues:
“At the end of every tax year in April, HMRC works out whether people in the Pay As You Earn (PAYE) system have paid the correct amount of tax.

People can pay the wrong amount if there are changes in their circumstances, such as moving jobs or receiving a pay rise, that are not reflected in their tax code. Others find that state or personal pension payments conflict, with HMRC sometimes unaware of a second income.”

HMRC typically collects outstanding debts by altering workers' tax codes for the following year. If it owes money, it often issues taxpayers with a cheque. In June, the Revenue said the number of people who owed money, or were due refunds, had risen from 5.2 million to 5.5 million in 12 months.

This has happened despite HMRC introducing "Real Time Information" (RTI) programme, which was supposed to eliminate errors by making employers report on what they pay staff on a weekly or monthly basis rather than annually.

In the leaked email, HMRC admitted that duplicate entries for workers was a major factor behind its latest errors. It also blamed employers for failing to provide the correct salary information in submissions about staff.

A spokesman for HMRC said the incorrect letters were "not demands" but merely tax summaries, "like the annual ones your credit card or bank sends you showing your total transactions across the year".

"No one has been asked to hand a penny over in tax because of this," the spokesman added.

If you need any help and advice with your PAYE, RTI or CIS, or looking to outsource your Payroll Department, contact ABDS NOW to discuss how we can help.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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Great with people  
Clear and precise with advice
Timely and cost effective 
In touch with issues that face our clients and
mindful of their long term strategic goals      
 

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