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HMRC chief 'deeply sorry' for tax demands

By Channel 4 News

Updated on 11 September 2010

The country's top tax official is forced to apologise to over a million people facing unexpected tax bills, after earlier denying HM Revenue and Customs had committed any errors. Experts tell Channel 4 News why tax letters "should not be ignored".

HMRC chief 'deeply sorry' for tax demands (Getty)

Dave Hartnett, the HM Revenue and Customs permanent secretary responsible for tax, said he was "deeply sorry" 1.4 million tax payers were being asked to pay back an average of £1,428.

"Everyone in HMRC is working hard to make this as painless as possible," he said.

Earlier in an interview with the BBC, Mr Hartnett 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.

"I'm not sure I see a need to apologise," he said.

After the comments drew criticism from MPs Mr Hartnett released a statement saying, "I apologise if my remarks came across as insensitive."

"I am working flat out with my colleagues to ensure everyone's tax is correct and the new computer system will help us do this," he said.

"It was this new system that revealed the extent and size of reconciliations required and will help us be more accurate in future but we do not underestimate the distress caused to taxpayers and once again I apologise."

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. 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.

"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

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.

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