In heated clashes with the powerful Commons Public Accounts Committee, chairman of the Revenue board, Nick Montagu, answered questions from MPs on how the department plans to deal with millions in overpaid taxes.
He revealed the Revenue intends to send letters to up to one million people in June informing them they have either over or under paid during the 1997/1998 tax year. The letter will say the Revenue intends to take no further action unless the taxpayers concerned feel it is necessary.
The admission that no further action was planned incensed Alan Williams, a Labour MP on the committee, who insisted Montagu had therefore established a new principle when dealing with taxpayers’ money.
‘What you are saying is that in your opinion, if there’s an error, and sums are small, you have a right to deprive taxpayers of a refund,’ he said.
Amid a furious verbal assault from Williams, Montagu attempted to stand his ground. He categorically denied that any new principle had been created and insisted no errors had been committed by the Revenue.
He insisted the Revenue would act if asked by taxpayers but he had to consider the ‘value for money’ implications of continuing to investigate the overpayments and that their had to be a ‘limit to administrative effort’.
The Revenue also came under attack for its strategy of sending a letter to the taxpayers. MPs insisted that it ‘wasn’t good enough’ because many of the people involved would have moved on in the four years since the tax was paid.
Confusion also surrounds how much the taxpayers may have overpaid individually.
Montagu said the median figure was £74 but committee members reacted angrily when he could not produce the range which produced the sum.
An average sum of £190 was calculated during the hearing but the Revenue may still supply more figures to committee members.
Though the Revenue will contact 1.4m people in all, the department believes, after sampling, that only around 13% of those will have paid the wrong amount of tax.
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