£3.7bn of self assessed tax at risk through errors

Up to £3.7bn of tax could be at risk because of errors on self assessment
forms, according to a report from the House of Commons Public Accounts
Committee.

A report out today (Tuesday) said some 46% of PAYE self-assessment returns
were submitted on-line last year, significantly exceeding HRMC’s 35% target.

The number submitted electronically was also 29% up on the previous year.

But the committee warned that 34% of filed returns were inaccurate, putting
£2.9 billion to £3.7 billion in revenue at risk. The majority is related to a
small group of taxpayers.

There was also a warning that the number of returns filed before the 31
January deadline at 69% was well below the target of 93%.

The committee also voiced concern at a second delay moving taxpayer records
from the existing PAYE system to the National Insurance Recording System, which
will add to the 16.2 million taxpayer files which have been kept open, leaving
taxpayers unaware that their tax record has outstanding queries which may result
in an additional demand for tax or a refund.

MPs on the committee said the delay was ‘regrettable’ but added that HMRC
must be absolutely sure the new system is working correctly before the
switch-over takes place.

The change is required to cope with modern employment patterns where
employees switch employer more often and frequently have more than one employer.
The existing system is employer-based, making it more difficult to assemble
information about the position of individual taxpayers.

Chairman Edward Leigh called for a strategy to eliminate the backlog ‘to be
established and implemented with all speed.’