Half a million taxpayers face tax underpayment bills

by Our Parliamentary Correspondent

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12 Jan 2011

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david gauke

NEARLY HALF a million taxpayers face bills for £180m in unpaid taxes from the last three tax years as HM Revenue and Custom's complete the task of dealing with the backlog of millions of cases believed to involve payment of the wrong tax.

Exchequer Secretary David Gauke (pictured) revealed the size of the debt in a written Commons statement, in which he said that tax owed in 250,000 other cases involving pensioners will be written off.

This applies to pensioners' debts from 2008/2009 and 2009/2010 because they would have had a good case for claiming HMRC had failed to act promptly on information which they had.

He announced reconciliation underpayment notices will not be issued for any years earlier than 2007-08 and where possible amounts owed from that year will be collected through PAYE.

HMRC would also not pursue sums of less than £300 due from 2007-08 and promised taxpayers facing hardship would be allowed to spread payments.

The minister said additional testing had been carried out on HMRC's new tax system to prevent a recurrence of the issuance of incorrect tax code notifications and progress introducing real time information would help reduce the need for reconciliations in future.

Gauke said HMRC chief executive Lesley Strathie would write to the Commons Treasury and Public Accounts Committees to report progress, providing them with an opportunity to hold hearings into the causes of the backlog of reconciliations and progress on preventing a repetition.

He said six million adjustments had been needed to establish the correct amount of tax was collected for the three years and claimed that by the end of 2010 in 90% of cases where HMRC had received all relevant information "customers" had received a refund of overpaid tax or a calculation of overpayment.

Gauke said HMRC had taken "a sympathetic approach" to collecting tax due and had written off sums where the concession ESC A19 applied because HMRC had failed to act promptly on information supplied.


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