Man declared bankrupt over 88p tax bill

A former taxi driver was forced to quit his job and almost lost his home
after the HM Revenue and Customs mistakenly declared him bankrupt in August last
year, ITV’s The Taxman Cometh will claim tonight.

Matt Matharu, 53, of Kent was just one of 1.5 million British people given an
incorrect tax bill last year, according to the show.

Matharu had worked as a self-employed cab driver until 2000, when he became a
director at a graphic design firm, switching to PAYE employee status. But
despite having his income tax contributions deducted at source, Matharu was sent
a bill for £12,000 by Inland Revenue last year.

When they received the letter, Matharu and his wife, Kate, sent documents to
HMRC to explain what they thought was a ‘misunderstanding’, expecting the matter
to be resolved. Instead, he was declared bankrupt by a High Court judge in
London.

The couple’s bank accounts were frozen, Matharu had to quit his job as
bankrupts are not permitted to be company directors, and their home was almost
repossessed.

‘My life was turned upside down and my family almost ended up homeless
because of their total and utter incompetence,’ he told ITV. ‘You just keep
hoping and hoping that someone is going to listen, look at the paperwork you’ve
supplied them, press a button on a computer.’

After realising their error, HMRC cleared the £12,000 bill and the bankruptcy
order was overturned in January. They now admit Matharu owed just 88p in tax,
but are demanding £45 interest on this sum, and also say Matharu is liable for
£2,000 in court costs.

HMRC told ITV: ‘Mr Matharu should have completed a self-assessment return.
However, we did not explain to him why it was necessary for him to do this.

‘We apologise for this and also not identifying that he had paid tax at
source under his PAYE record.’