HMRC has admitted that 5.7 million people have paid the wrong amount of tax due to errors in the tax code system. The figure includes 1.4 million who have paid too little and will face demands for repayment as well as 4.3 million who paid too much and should receive rebates. Taxpayers who will receive letters explaining that they under-paid face losing an an average of £1,428 each, starting from next April when National Insurance rises will come into force and VAT has increased to 20 per cent. But people hit with the demands may be able to refuse to pay up as under tax rules HMRC must issue demands for underpaid tax within 12 months of the end of the tax year in which it became aware that people had underpaid. If people provided HMRC with all the information they needed to get their tax code right and HMRC failed to do this, taxpayers can ask for an Extra Statutory Concession, also known as an ESC A19. Mike Warburton, senior tax partner at Grant Thornton accountants, said: "Most reasonably intelligent people will assume that the taxman has got is calculations right." Angela Beech, partner at chartered accountants Blick Rothenberg, said: "Those that receive these demands need to think before they automatically pay up. "If you had given HMRC information that would have enabled them to adjust your tax code to make sure that you did pay the right amount of tax, then, if the time limit has passed for them to use that information, they cannot pursue you for the unpaid tax." An HMRC spokesman said: "HMRC can consider writing off the underpayment in certain circumstances. "Basically these are if HMRC had been provided with all the information necessary to get their tax right and the taxpayer could have reasonably expected their tax deductions to be right. "In these circumstances they need to contact HMRC and ask for the underpayment to be reviewed on that basis."PAYE tax error: Workers urged to use loophole to avoid HMRC
tax repayment demands
Up to 1.4million workers facing demands from HM Revenue and Customs
to repay money after they under-paid tax could use a loophole to avoid doing so,
accountants have advised.
Sunday, 12 September 2010
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