TOP officials at HM Revenue & Customs will be wincing this morning after being roundly condemned for their handling of the PAYE debacle at the end of last year.
You will remember it emerged that 1.4million people had unwittingly under paid on their PAYE liabilities and were about to face a claw back from the taxman. At the same time 4.5million taxpayers had overpaid. In all there was £2bn still to collect and £3bn overpaid.
But today the Commons public accounts committee (PAC) lambasted HMRC for its “mismanagment” of the issue. HMRC defended itself vigorously at the time. The man in charge, Dave Hartnett, at one time even said on Radio 4 that he didn’t feel the need to apologise. After stinging criticism he eventually did.
But there are some interesting points from the PAC remarks. The first is the criticism that HMRC kept taxpayers in the dark over the problem. This seems to imply that the taxman should be moving much more quickly to inform taxpayers of problems with their tax affairs. As a matter of principle this has to be right.
The PAC also complained that the taxman moved too quickly to write-off small tax bills below £300. The threshold for write-offs had been £59. The threshold should therefore not have been moved. Little sympathy there for taxpyers with slightly larger bills to pay and not necessarily more money to pay them.
Lastly, the PAC lays into the implementation of the IT systems for PAYE called NPS. And you can’t help but wonder whether any IT system is capable of working properly when dealing with such vast quantities of data. This is not the first IT crisis HMRC has had, and it increasingly seems prone to difficulties when it comes to such big systems.
It can’t help but make the informed observer nervous about prospects for the introduction of compulsory digital filing of corporate tax returns. This is supposed to take place from 1 April but already at least one software provider has said its full piece of kit will not be available on time. Who knows what bugs will emerge once HMRC’s system is being properly used. Company accountants will be keeping their fingers crossed that the crises can be held at bay.
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