HMRC blunders mean one in three could be paying wrong tax

New research has found that basic errors made by HMRC employees mean that one in three taxpayers might not be paying the right amount of tax.

Accountancy firm UHY Hacker Young who carried out the research found that the most common mistakes being made were the failure to tax employee benefits such as company cars and private health cover.

A similar study carried out in 2012 analysing pay as you earn (PAYE) tax codes sent to its clients found errors in around 25%.  This year the errors increased to 37%.

A spokesperson for UHY Hacker Young said that the errors were of grave concern since the majority resulted in client’s having underpaid tax without realising.  Those affected would be hit with an unexpected bill for significant sums of money a few months after HMRC realises the mistake.

Roy Maugham, Tax Partner at the firm said;

“Underpaying tax is more of a problem than people realise as it can be a shock to an individual’s cash flow when HMRC moves to claw it back…. The majority of people will have forgotten to make an allowance for this, and so their finances might be strained.”

He added;

“Mistakes most frequently occur when someone has several sources of income, for example income from an investment as well as a salary and benefits from their employer, or where they have received a large one-off sum such as a dividend payment.”

Some have blamed the increase in tax code errors since 2009 on a new computer system which was installed to combine information on National Insurance contributions and PAYE.

However, an HMRC spokesperson refuted the study, saying;

“The numbers being cited are not correct.  Accuracy of PAYE coding notices is now 99%.  The vast majority of people are paying the right tax at the right time through PAYE.”



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