Taxman 'could owe workers £3bn'
Updated on 20 July 2010
The taxman could owe millions of British workers as much as £3 billion in overpaid taxes dating back to 2007-08 and earlier, according to a report.
And a backlog of underpaid taxes from four or more years ago could lead to HM Revenue and Customs demands for an extra £1.4 billion from taxpayers, said spending watchdog the National Audit Office.
The problem could affect as many as 15 million people, many of whom may not know that they are facing additional tax demands or due repayments which could run into thousands of pounds.
The NAO said the backlog was caused by the troubled introduction of a new computer system which was intended to combine National Insurance and PAYE income tax payments into one record for the first time.
By the time of its implementation in June 2009, the system had been delayed twice, leading to a backlog of 18.2 million unreconciled cases involving 15 million people, said the NAO report on HMRC's annual accounts for 2009-10.
HMRC's early analysis suggests that around half of these cases - about 9 million - are likely to involve incorrect payments, which could lead to £3 billion in overpayments and £1.4 billion in underpayments.
The NAO found that the delays were "justified" as the system was not ready to go live earlier. But the slippage resulted in an additional cost of £33 million and the loss of £55 million in planned efficiency savings.
Changes to system requirements added a further £78 million, bringing the total cost of the project - expected to save £532 million over five years - to £389 million.
The report said that the task of clearing the backlog remains "a very significant challenge", and it warned that the sums involved are "substantial" and could come as a surprise to the taxpayers affected.
The NAO was also critical of HMRC's performance in recovering overpayment of tax credits totalling £4.5 billion.
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.
