Six million pay the wrong tax

The taxman is to contact up to six million people to inform them they have paid the wrong tax. Many may face demands of an additional additional £5,000 while up to 1.4 million are expected to be told they will have to find another £1,400 to settle underpaid tax bills.

According to reports in the press over the weekend the errors were identified by a new computer system which found underpayments in the PAYE system totaling £2bn.

The discovery also included around four million people who will receive rebates for over payment. The first batch of letters from HMRC, around 45,000, should arrive with taxpayers tomorrow (Tuesday). OF those 15,000 will concern tax that is still owed.

A HMRC spokesman is quoted saying: "The vast majority of the 40 million people who pay through PAYE deductions are correctly taxed, but because circumstances change during the year there will always be a minority who have paid either too much or too little."

Anita Montieth of the ICAEW is reported is some papers saying that HMRC can abandon tax demands in some cases if they did not use information that was available at the time the tax was due.