Millions Affected By Tax Blunder

Millions of UK tax payers will be told they have paid the wrong amount of tax, with some being handed a £400 rebate while others will be hit by £600 in back payments.

Around six million are expected to receive the tax rebates, while one million others will be told they have underpaid and will be asked to pay their missing tax contribution in stages.

Her Majesty's Revenue and Customs (HMRC) said it carried out an annual check to make sure the amount of tax and National Insurance deducted by employers matched its records.

However a new computer system, which HMRC described as still "bedding in", identified the discrepancies.

An HMRC spokesman said: "Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch.

"We are getting cases that were left unreconciled [sic] up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.

Last year, HMRC revealed that 4.3 million people were due refunds for overpayments while some 1.4 million owed the taxman after paying too little.

Around one million people will receive letters in the next few months notifying them that they have paid too little or to much tax.

Those affected will be able to pay the amount back in stages if necessary, by either having their tax code adjusted or coming to an agreement with the Inland Revenue.


Related UK National News Stories
Click here for the latest headlines.

30 November 2010
Corporation Tax Reform To Create 'Competition'
The Government has published details of its Corporate Tax Reform programme consisting of a series of essential reforms designed to improve the UK's tax competitiveness. Measures include the introduction of new Controlled Foreign Company (CFC) rules and a commitment to introduce a Patent Box.
31 March 2005
Lib Dems pledge to scrap 'unfair' council tax
The Liberal Democrats have vowed to scrap the "unfair" council tax, on the 15th anniversary of the poll tax riots. The party said that the council tax should be replaced with a local income tax, based on the ability to pay.
30 May 2014
More Fall Into Debt Following HMRC Overpayments
The number of issues reported to Citizens Advice of people falling into debt as a result of repaying overpaid tax credits increased by 14 per cent in the 2013/14 tax year. Tax Credit debts arise when HMRC over-estimates a person’s entitlement to financial support and ends up having to recoup overpayments.
06 April 2011
Government Tackle Tax Avoidance
David Gauke, Exchequer Secretary to the Treasury, has today announced a change in legislation to prevent tax avoidance. The measure will prevent individuals from taking advantage of a tax loophole that would have emerged today had the Government not taken action.
18 March 2004
Chancellor’s film relief rules broadly welcomed
Chancellor Gordon Brown’s decision to offset the closing of a tax loophole widely used by filmmakers with extended tax relief has been generally well received by industry bodies.