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01 Aug 2008
HM Revenue & Customs (HMRC) has been failing to collect all the tax due on pension income since 1983 because of errors it made in applying PAYE regulations on pension income, warns network UHY Hacker Young.
According to the latest National Audit Office report on HMRC’s accounts, HMRC is preparing to reclaim tax from an estimated 420,000 pensioners, resulting in up to £135m in lost tax revenue every year for the past 25 years, the Birmingham Post reports.
UHY Hacker Young notes HMRC will not issue pensioners with correct PAYE codes until 2009-10 and although HMRC has agreed to waiver unpaid tax for the years up to 2007-08, it will begin reclaiming unpaid tax for 2008-09 and 2009-10 during 2010-11.
‘The pensioners hardest hit by HMRC’s mistakes will be those on low incomes who will face a bill for up to two years worth of unpaid tax on top of higher tax bills,’ Malcolm Winston, UHY Hacker Young partner, said.
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