Saturday, September 4, 2010

Fingers crossed

Tax, seems the inland Revenue have made a bit of a blunder and both undercharged and overcharged the taxpayers of the land in their ever voracious grasping into our wallets and purses.
Seems some people could owe £1500 whilst other could be owed £418. I must admit I hope I'm in that group, or the group who owe and are owed nothing at all.

Nearly six million people in the UK have paid the wrong amount of tax.
About £2bn was underpaid via the Pay as You Earn (PAYE) system in the past two years, with about 1.4 million people owing an average of £1,500 each.
But £1.8bn has also been overpaid and some 4.3 million people will get a rebate because they have paid too much.
Treasury minister David Gauke said that in the current financial climate, the government was not in a position to "just wave goodbye" to the money owed.
He said the government had inherited the problem and the PAYE system - which was created in the 1940s - was struggling to cope with modern working patterns.
A new computer system introduced by HMRC in 2009 has allowed more discrepancies to be identified.
As a result millions of letters will be sent to taxpayers across the UK informing them of errors in their contributions.
The first 45,000 are expected to arrive on Tuesday, with 30,000 informing recipients they are due a rebate of on average £418.
The remaining 15,000 letters will tell taxpayers they have underpaid and will have their tax code altered next year to recoup the money.
Times are hard for many folk at the moment and the last thing they need is an unexpected tax bill, particularly when it isn't their fault but that of their employer or HMRC.
Perhaps if people were more responsible for their own tax there would be fewer mistakes, then again PAYE makes it easy, although it puts the onus on employers rather than the people to pay their tax. Someone once posited abolishing PAYE and everyone gets a tax (local and national) bill on the 5th of April, Elections are then held the week after, they reckoned it would reduce bills and eliminate waste as councillors and politicians would move heaven and earth to be re-elected including providing true value for money.

It's worth a thought anyway.

3 annotations:

English Pensioner said...

These sort of mistakes make the arguments for flat rate taxation even stronger. Unless you only have a single source of earned income and no investments, you need to be an accountant to understand the convoluted reasoning behind the Revenue's calculations.

The objection that a flat rate benefits the rich may be true, but I suspect the loss in taxation would be more than offset by the huge reduction in collection costs an administration.

I've only got a company pension and my state pension, but so far this year I've had three coding notices from the IR. And it still remains a mystery how they offset my untaxed state pension against my personal allowance so as to increase the tax I pay on my company pension

Anonymous said...

Completing tax forms is, I understand, a total nightmare. Friinds in America tell me it's like getting through War and Peace.

I don't know how the less able would do it.

I've had to do with the Revenue in the last year and my experience is of a bunch of people who know not what they do.

Jobs left for other people to do; jobs done incorrectly and having to be done over, and snippy staff who actually didn't understand anything tax.

Promises to act were given and broken, month after month..and the deadline was approaching.

Finally the threat of contacting an MP may have what got results... but who knows if they got it right?

JuliaM said...

"These sort of mistakes make the arguments for flat rate taxation even stronger."