Online glitch hits taxpayers

Thousands of individuals who filed their tax returns online between 30
December and 30 January could face tax demands for up to £2,000 over the next
few week even though they thought their tax position for 2005/06 was sorted out.

This stems from an error in HMRC’s own online tax return software. According
to PKF, HMRC forgot to
turn off the box that allows users of the software to opt for any tax they owe
for 2005/06, up to a maximum of £2,000, to be collected in instalments from
their pay during the 2007/08 tax year.

This option should not have been available to those who filed their
tax returns
online after 30 December – they should have been told to pay any
outstanding amount in one lump sum by 31 January 2007.

HMRC only publicised its mistake on 30 January by posting a small notice on
its website – so thousands of taxpayers would have been unaware that they had to
rush around and make a large tax payment at only a day’s notice.

Such a payment would probably have had to be made electronically as many
local tax offices are out on strike. Those who had not paid their tax by 31
January will automatically be charged interest on late payment and a 5%
surcharge is added if the tax is not paid by 28 February.

Peter Penneycard, National Director of Tax at
PKF
said: ‘It would be outrageous if an online filer had to pay interest on tax
paid after 31 January because of HMRC’s mistake. As HMRC has effectively misled
online filers it should rush the code adjustments through rather than sending
out demands.

Penneycard said this type of error would damage confidence in HMRC’s systems.

Further reading:

Tax man relaxes online filing deadline

Companies House overwhelmed by online filing

Online self-assessment tax filing up 40% on last year