HMRC To Issue Mended Tax Statements Following Calculation Error.

What’s the thing that gets most people worried?

Well, as accountants we’d probably have to say – tax demands and bills. We all dread these estimates dropping on our door mats, and understandably feel immense relief once we’ve paid our dues and staved off the tax man for another year. But imagine if another tax statement were to drop through your letter box subsequently, telling you you hadn’t paid enough and would have to stump up another wedge of cash? That sort of thing can’t happen, can it? Well, unfortunately the answer is yes it can. That’s exactly what’s happening right now after another administrative error from HM Revenues and Customs (HMRC).

HMRC has revealed it is distributing second tax statements to thousands of taxpayers after their initial estimates for the year to April 2014 were miscalculated.

More than 5 million taxpayers were given their initial estimates because they paid the incorrect amount of tax in the year to April. However, HMRC has now claimed that ‘errors’ had now been spotted in the calculation process, so amended bills would need to be issued. What sort of errors? Well, HMRC is saying it’s mainly incomplete information from employers.

An HMRC spokesperson issued the following statement:

“The majority of the errors have happened because an employer failed to make a final payment statement for the 2013-14 Tax Year, meaning our records were incomplete despite reminders that these submissions had to be made.”

Are any other tax payers likely to have been affected by the latest administrative error?

Well, HMRC believes so and is saying that workers who have multiple income streams or moved jobs during the tax year may also have paid the wrong amount of tax as a result.

How did the error come to light? Well, every year HMRC staff cross-check the amount of tax paid by individuals with information from its own records, self-assessment forms and PAYE information given by employers. If the figures don’t match, then HMRC takes action to correct any errors. HMRC will either issue new statements either saying that more tax will need to be collected during the following year in interest-free monthly instalments, or that individuals would receive a rebate cheque for overpaying. The typical amount involved is around £200, according to an HMRC spokesman. But what happens if you’ve already received a rebate earlier on in the year and spent the windfall? Well, HMRC has said it will “push the boat out” to assist those who may have received their rebate in error.

How has the accountancy world reacted to the latest in what is a long series of errors by HM Revenues and Customs? Well, as you might expect, accountants are less than impressed. Jason Piper, technical manager of tax and business law at the Association of Certified Chartered Accountants (ACCA), said:

“Yet again, we are seeing errors in the operation of PAYE, and HMRC must learn the lessons from earlier problems and be transparent and accountable this time around.”

“Public patience is wearing thin with government IT failures, and one like this which hits so close to home for taxpayers the length of the country, is bad news for a department trying to extend the reach of its powers into every aspect of our collective financial lives based on the power of its computer systems.”

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