Business News
HMRC’s Latest Oversight to Affect 150,000 Pensioners
HMRC have come under fire again over the weekend after they failed to take into account those that claimed their first pension this year, the result being tax codes and demands for underpaid tax being sent to approximately 150,000 pensioners.
To add fuel to the fire, this is not the first time this has happened after two previous years of the same mistakes that were only recognised once the new National Insurance and PAYE computer system was in place. Previous years’ mistakes saw payments waivered; however it has come too late for this year’s unlucky thousands as HMRC claims it does not have the power to write the payments off being discovered in-year. In a bid to appease this, those affected will be given 3 years to clear the deficit.
Paul Lewis, Presenter of BBC Radio 4’s Moneybox, who labeled the situation HMRC’s “latest tax bungle”, interviewed CIOT tax policy director John Whiting, who said, “I think it’s the final knockings of the switch HMRC have done to their new computer system. And I say final. I hope it’s the final one” after urging the department to offer the three-year payment option as a default. The department has since confirmed that this will be implemented in due course.
A representative also added “We have included the state pension in the tax codes for 2011-12 which we issued recently. This means that they will be on the right footing for the future and paying the correct amount of tax from April 2011.”
Once all the end of year PAYE forms are received for 2010-11 (19 May), HMRC will then reconcile its records for the year and dispatch P800 tax calculations to pensioners who may have paid too much or too little tax during the year.
“To ease the burden of paying back tax owed, we will automatically spread collection of the amount over three years’ tax codes starting 2012-13,” the spokesman said.
“We realise that a tax bill customers might not be expecting will be upsetting. We are sorry that some customers will have to pay more tax than they expected, but we do have a duty to collect this money so are concentrating on making the process as painless as possible for those affected.”
Following the debacle of these events, HMRC are putting together concessions to assist those affected this time, and will be reviewing in conjunction with the Department of Work and Pensions to highlight the issues in importing the Pensions Data over to be included in the PAYE codes, and thus avoid a fourth year of mistakes come the end of the tax period next year.
