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Older people 'getting raw deal' from HMRC

25 February 2010
Categories: News , Income Tax
Tax system must be simplified for pensioners, say MPs

HMRC are failing taxpayers above retirement age by running a confusing systems and overcharging tax, according to a new parliamentary report.

The document from the Committee of Public Accounts claims that around 1.5 million senior citizens have overpaid tax by £250 million because of discrepancies between the Revenue's records and those of employers and pension providers.

'Older people are more likely to comply with their tax obligations than other taxpayers, but many are getting a raw deal from their dealings with HMRC,' said the committee's chairperson, Edward Leigh MP.

'The department's systems are complex to the point where they confuse many older people. The systems also do not cope well with the multiple sources of income that many older people happen to have.'

The MPs' report, compiled on the basis of evidence from the Revenue, notes that individuals over the state pension age make up almost a fifth of UK taxpayers, and their tax affairs ten to be more complicated than those of younger people. However, older taxpayers are less likely to contact the authorities for assistance.

Tax-coding notices and age-related allowances pose the two most significant difficulties for older people, who are issued multiple codes frequently because they have numerous sources of income.

Issues regarding incorrect tax-coding make up more than 40% of calls to the LITRG’s TaxHelp for Older People service, said director Paddy Millard, who criticised the ‘scandalous’ manner in which age-related tax allowances are issued.

Most elderly taxpayers are unaware of the allowance and so do not claim them, said Mr Millard, who said they should be allotted automatically. They fact that they are not is down to ‘Treasury paranoia’.

‘The department is terrified of giving money to the 10% who aren’t entitled, and it doesn’t care about the 90% who need every penny they can get. It's a major scandal.'

Approximately 2.4 million older people have also overpaid around £200 million in tax because they did not have their savings income paid gross of tax, says the Committee of Public Accounts report, which urges the HMRC to simplify their systems, establishing a clear plan of approach by June.

‘[The Revenue] must also work with other government bodies and, importantly, the third sector to provide older people with the access they need to straightforward information and help with managing their tax affairs,’ said Edward Leigh.

‘The preference that many older people have for face-to-face advice should not be sacrificed in the department's drive to achieve efficiency savings.’

Categories: News , Income Tax
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