HMRC chief refuses to apologise for tax demands
Updated on 11 September 2010
The country's top tax official denies any errors by HMRC and says he has no need to apologise after six million people paid the wrong amount of tax. Experts tell Channel 4 News why tax letters "should not be ignored".
Dave Hartnett, the HM Revenue and Customs permanent secretary responsible for tax, said the situation was not "extraordinary" and defended asking those who owed more than £2,000 to pay it back more quickly - arguing that they were likely to be the highest earners.
It is thought that 2.3 million people underpaid income tax during the past two tax years due to errors in their Pay As You Earn (PAYE) tax code but around 900,000 will escape repayment after the Government raised the write-off threshold.
Those who will have to make up the shortfall collectively owe around £2bn, or an average of £1,428 each.
Asked if he would say sorry to those facing unexpected bills, Mr Hartnett told BBC Radio 4's Money Box programme: "I'm not sure I see a need to apologise.
"I've read the papers, listened to the media and heard stories of HMRC blunder and IT failure - neither of those are true.
"Every country that I know of that has deduction of tax from wages and salaries has to do a reconciliation at the end of each year and we're doing one."
He added: I don't think we are extraordinary. Once or twice in the past the numbers have been very large - sometimes they're less - it depends on how the system has been operated and what issues there have been.
"We didn't get it wrong. This needs to be reconciled."
People who owe less than £2,000 will be able to pay the money in monthly instalments taken from their salary over one to three years but those owing more will have no more than three months to return the cash.
Asked why they faced a shorter timetable, Mr Hartnett said: "Because I think owing the most may actually mean they're earning the most. I think it's very unlikely that a low earner will owe us more than £2,000 as a result of the process we're going through now."
"Don't ignore tax demand letters"
You do always need to check the figures, the tax people are human beings just like we are and make mistakes so make sure they've included all the reliefs you might be entitled to, that they've got your personal allowance right, if you've made charitable payments they're included or pension payments, writes Angela Beech, head of personal tax at Blick Rothenberg.
Check the figures, make sure they're accurate. Have a look at your own records and do check the information they're using and make sure that it's right.
It's not going to be unusual that people, particularly pensioners or someone who's been made redundant, can't afford to make tax payments.
Talk to the taxman, don't bury your head in the sand and think it'll just go away. Contact them, tell them your circumstances and you may be able to come up with a payment plan so you'll pay it off on a monthly basis.
The only thing is they'll still charge you interest for as long as it stays unpaid, but at least you're not going to get the bailiffs at the door or debt collectors, so contact them.
Read more: Angela Beech answers questions on PAYE tax blunder
He indicated that around 45,000 letters were sent out as an initial pilot - with changes potentially being made before the rest of the six million people who owe tax or are due refunds received theirs - due before Christmas.
"We're going to be as sympathetic as we can to anyone who comes to us and says you're trying to take too much money too fast," he said.
"If the results of the exercise we're now engaged in show that there are aspects of our plans which are not going to work well for the work we're trying to do or for our customers, we will consider changing them."
Every year, HMRC checks that the amount of tax and National Insurance deducted by the employer matches the information held on its records.
The wrong amount of tax may have been paid if people failed to tell HMRC about a change to their circumstances, such as starting a new job, having more than one job, or receiving a new benefit through work, such as a company car.
In some cases the wrong tax code will have been used because HMRC failed to act on information it was given, but in other cases it will be the fault of companies for not passing on changes to employees' circumstances to the Revenue, or the fault of the individuals themselves.
A high number of errors were thrown up this year due to the use of a new IT system, which holds all the information on an employee in one place, rather than having it spread over several different systems, making it easier to spot discrepancies.