Saturday, 4 September 2010

Are You One of the 5.7 Million?

It is estimated that 5.7 million people have paid the wrong tax over the last two years. It's well know that our Revenue department is inefficient but the scale of these 'errors' is mind-blowing.

More than 4 million of us can expect an early Christmas present because they overpaid the taxman £1.8 billion. Another 1.4 million will be told they have paid too little, totalling £2 billion, although they will not be expected to make it up immediately.

Next week an estimated 30,000 people are expected to be the first to receive letters containing HM Revenue and Customs refund cheques. Initially only 15,000 will be warned they have paid too little and the Revenue, in order to claim the money, will adjust their tax codes from next April. How considerate of them. The remainder of the estimated 5.7 million people who have paid the wrong tax over the last two years are due to hear from the taxman by December.

The coalition government blame the last Labour government for making the tax system more complex and failing to reform PAYE over 13 years in power. They have started a consultation on reforming the PAYE system. We all know how effective that will be don't we.

Sources said the mistakes have been uncovered through use of a computer system which matches records automatically. Tax staff had to check Revenue and employers' records by hand to see if the right amounts were paid. Last month a highly critical report by the National Audit Office said that millions of workers had been left an estimated £3 billion out of pocket, which was blamed on a new computer system which issued wrong tax codes.

If you peruse government department accounts, you will know we spend vast sums of money on IT and yet, a generation later, these offices are no more capable of using or checking their software. I say let's go back to the old system of manual calculations and stop throwing money at IT companies who are unable to produce safe and appropriate programmes.


Strathturret said...

I have invested in Tax Handbook (Zurich) about £40 each year.

Has saved me thousands over the years.

In my experience small town lawyers/accountants dont know all the rules/dodges!

subrosa said...

Wish I'd known about that earlier Strathturret. I've used accountants who have shown themselves to be useless.

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