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Revenue dismisses PAYE errors claim

16 August 2010
Categories: News , Rob Durrant-Walker , Admin , Employees , Income Tax
Taxman over-collected £238m, says accountancy firm

HMRC have refuted a claim that computer ‘glitches’ led to significant rises in inaccuracies in PAYE collection during the most recently completed tax year.

According to tax investigations specialist at accountancy firm UHY Hacker Young, the Revenue collected £238 million too much as a result of PAYE errors in 2009/10, up from £96 million in 2008-09: a 148% increase.

The department also under-collected £132 million from other taxpayers, up from £114 million in 2008-09, said the company, which added that the blunders were ‘ironically due to glitches in a new computer system designed to make PAYE processing faster and more accurate, as well as a fall in the accuracy of manual processing by HMRC staff as they get used to new processes’.

UHY Hacker Young tax manager Rob Durrant-Walker remarked, ‘Even though HMRC’s new system should lead to more accurate codes in future that can cope with increased job mobility, these figures are quite shocking.

‘Taxpayers can overpay for a considerable period of time before they notice they are paying too much. On the other hand, if they pay too little this can create financial problems in later years, when HMRC collect what can be a hefty tax bill.

‘The Revenue is increasingly transferring more work between offices, so taxpayers are increasingly uncertain which offices handle their tax affairs. Sorting out the mess caused by these errors can be incredibly time-consuming,’ said Mr Durrant-Walker.

HMRC responded to the accusations by pointing out that ‘overpayments and underpayments have long been a feature of the PAYE system, which is based on a model of employment that no longer reflects the contemporary job market. We don’t regard this as acceptable, so last year we introduced a new computer system.

‘The new system raises the bar in terms of data quality and will, in the medium term, significantly improve overall accuracy reducing both underpayments and overpayments,’ said a department spokesperson.

‘Our contact centres are able to quickly correct inaccuracies, when contacted by the taxpayer, in part because the new system has for the first time created a single taxpayer record that the contact centre operator can access and amend.’

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