David Cheskin/PA Archive/Press Association Images
Tax experts have revealed a major new series of mistakes from the taxman. HMRC is apparently making serious errors when estimating whether you have paid the right amount of tax.
So could you be a victim?
Accountancy firm Kingston Smith is warning taxpayers that the taxman may well be making serious mistakes on their P800 tax calculations. These forms are sent to taxpayers when HMRC thinks that they have paid too much or too little tax.
The problem is that the income figures on the form are just estimates (something which isn't entirely clear from the form itself). They are based on the previous year's known sources of income, which could vary significantly from the actual figures. The firm says there have been a spate of incidents where taxpayers were given inaccurate figures.
Accountant Andrew Shaw, explains: "When taxpayers receive a letter on official HMRC paper detailing their tax liability, many naturally assume that the numbers are correct. Our experience shows that this is not always the case, often because some of the figures used represent last year's known income."
He continues: "Whilst the earnings taxed under PAYE are usually correct, the figures indicating other sources of income are sometimes simply wrong. This can occur for any number of reasons – for example, if the taxpayer's dividends or bank interest have changed since the previous year, which is more likely than not.
Shaw urges: "Taxpayers who receive a P800 Tax Calculation should always check the numbers against their own records and notify HMRC immediately of any discrepancies; unfortunately, once again HMRC cannot be trusted to get it right."
The accountants also reveal a host of problems related to those completing self-assessment tax returns for the January 31 deadline. HMRC has apparently issued a host of unnecessary tax return reminders about the online filing deadline to Self Assessment taxpayers who have already filed, and in some cases paid the tax due on, their tax returns.
A number of the letters – some of which were dated as early as 5 December, but were not received by taxpayers until over a month later – have been wasted on taxpayers who had already met the online Self Assessment deadline for online filing last year.
If you receive a reminder, it is always best to double-check your online account to see if there is anything left outstanding. It will be clear from your login whether the form has been submitted or not and whether they is any money outstanding. This is a more up-to-date record than the letters ever can be.
The five biggest taxpayer stings
- 1. HMRC vs Vodafone
Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.</p>
- 2. HMRC vs Goldman Sachs
The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC <em>did</em> claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.</p>
- 3. Taxpayer vs Carlyle Group - QinetiQ
Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.</p>
- 4. Taxpayer vs NHS Management
The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.</p>
"BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.</p>
- 5. Taxpayer vs public sector productivity
Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.</p>
Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.</p>