Tax masters knew of PAYE error two years ago


MP's will today confront HMRC after it has emerged that they knew of the Pay-As-You-Earn system error around two years before issuing extra money demands to unwitting citizens.

The first batch of letters informing people that they had to pay more tax were sent out in September of 2010, however it appears that these errors were discovered by HMRC as early as 2007. Despite having the necessary information, further computer errors meant that millions of unsuspecting people, including families and pensioners, were not given notice until just last year.

Now, a committee of MP's will seek to find more answers, and also condemn HMRC, with regards to the blunder that has left million out of pocket.

The chairman of the committee, Margert Hodge, slammed HMRC: “HM Revenue and Customs has failed in its duty to process PAYE accurately and on time. The Department knew that seven million people had overpaid or underpaid tax in 2008-09 but took no action and did not start informing individuals until September 2010 because of problems with the new computer system. This came on top of the Department's failure to tackle a backlog of PAYE cases from 2007-08 and earlier, affecting some 15m taxpayers,” she said.

A spokesman for HMRC replied: “We recognise the uncertainty and concern caused to people by unexpected tax bills. The new computer system is now allowing us to bring taxpayers' records up to date, improving the accuracy and fairness of the tax system for the future.”