Don’t panic over income tax gaffes, people urged (From Bournemouth Echo)

Don’t panic over income tax gaffes, people urged

11:30am Monday 6th September 2010 in

• Skip social links
• Print
• Email
• Comments(3)

LOCAL income tax payers have been advised not to panic if they find themselves among the millions told their pay as you earn deductions were wrongly calculated last year.

Letters are being sent out between now and Christmas to 5.7 million people affected by the HM Revenue and Customs blunder.

Although the majority will receive rebates, an estimated 1.4 million are expected to have to repay an average of £1,428.

Heather Williams, tax director at Poole-based chartered accountants and business advisors Princecroft Willis, said the problem had arisen over people being given wrong tax codes by HMRC.

“They used to do it manually and used to have someone in charge of each payroll. Now it’s computerised,” she explained.

“It’s a horrible situation. I can’t believe that a system can make such a silly error. They have cut staff and this is the result. It’s a real shame.

“Most people, when they receive their net pay, believe it’s correct and go away and spend it. They wouldn’t necessarily realise it. This is going to be a real shock to a lot of people. The letters are quite scary.

“I can see implications beyond the administrative burden.

“What’s to say they’re not going to get it wrong this year?

“If they have made that number of errors, getting an answer on the telephone is going to be well nigh impossible.”

Mrs Williams said underpayment was usually clawed back through adjusting people’s tax code, but advised: “If anyone is really struggling, there are ways and means.

“You can ask for more time to pay, especially if it’s the inspector’s fault.

“People must ask for help.”

HM Revenue & Customs admitted it had to “improve accuracy” after the weekend’s revelations.

Its head of national news, Paul Franklin, told BBC Radio 4’s Money Box: “The roots of this are in the fact that PAYE came in in 1944 during the Second World War, at a time when many people stayed with the same employer the whole of their working lives.

“It’s not like that any more.

“We have to reflect that and have new systems.”