Many could be in debt to tax man

It has been announced recently that once again HM Revenue & Customs is planning to send out letters to millions of people over the course of this summer in a similar operation to the controversial and embarrassing one that was carried out last year. In 2010 HMRC had to contact millions of people either to repay tax that had been overpaid or to demand underpaid tax. This followed errors that the tax office blamed on its computer systems.

However, it has now emerged that nearly five million people may have paid the wrong tax in 2010/2011, which means that another round of letters will have to be sent out informing millions of people whether they are owed money by the tax office of whether they owe money to the taxman. Whilst those that are owed money could be in line for a nice little windfall of several hundred pounds, the situation could be very worrying for those that are contacted to say that they owe money to the taxman.

According to reports around 1.2 million people underpaid tax by an average £600 in the last financial year due to HMRC miscalculations. For these people the repayments will have to be made via a change in their PAYE codes that will see them lose an average £50 a month on their wages until the debt has been paid. However, like last year the move is likely to cause uproar amongst those that are being forced to pay money that they didn’t even realise they owed. Some of the people who owe money may have even retired since last year.

One official said: “I have a particular concern about pensioners, not simply because many would find it difficult to pay the tax, but because they are often caught with underpayments. When they start to draw the basic state pension, many continue to have their full personal allowances attributed by mistake against other sources. It is therefore quite easy to run up an underpayment of more than £1,000 a year.”

Tags: uproar, Social Issues, underpaid tax, Low Income Taxpayers, HMRC, Taxation, PAYE

Filed under: News

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