Caven blog

HMRC blunder means six million get £400 tax refund

Six million tax payers will receive a refund of £400 from HM Revenue and Customs (HMRC) this weekend as it has made the decision to settle discrepancies from as far back as 2001.

However, 1.2million will be told that they owe £600 as HMRC has to find £620million.

The lucky ones who are due a refund will receive a cheque in the post. Those who owe HMRC money will have a choice of sending a cheque for the whole amount or having their tax code adjusted to pay it off gradually.

The miscalculations occurred because of widespread problems with the PAYE system. The problems mean more than seven million people have paid the wrong amount of tax over the past ten years.

The refunds will cost HMRC £2.5billion. However, the department says it is not evidence of a “blunder”.

The mistakes were discovered after a new computer system was installed last year. HMRC is saying the refunds are simply the clearing of a back log made possible by the new system,

One million of the settlements are for the previous tax year, 2010-11, but six million are outstanding claims dating back to 2001. They are now being paid-off en masse.

HMRC is not a stranger to criticism of the PAYE system. In addition, critics are saying the amount being paid out to tax payers is minimal considering the payouts to Goldman Sachs and Vodafone.

Jesse Norman MP, a Conservative member of the Commons Treasury committee, said the news will come as a “nasty surprise to some people, and as a nasty surprise to the Government that will have to find the money for millions of reimbursements.”

HMRC has also had problems with its tax credit helpline. The consumer website MoneySavingExpert said some claimants had been unable to get through despite trying for two weeks.

Related Links:

Read more on the story (Telegraph)
Find local tax solicitors throughout the UK (Caven)

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