HMRC bungles are part of a wider problem

February 01, 2011 11:56 AM

The Public Accounts Committee has criticised HMRC for their mismanagement of the tax system. We’ve seen repeated bungles by the tax authority, and unfortunately stories of over payments, under payments and dodgy computer systems are not new. This morning’s news is no different: the implementation of a new computer system has delayed the processing of tax returns from 2008-09, causing “unacceptable uncertainty and inconvenience to the taxpayer”. HMRC has also failed to tackle a backlog of 18 million PAYE cases from 2007-08 and earlier, affecting an estimated 15 million taxpayers. The PAC estimate that £1.4 billion of tax was underpaid and there is £3.0 billion of overpaid tax to be refunded. What's more, HMRC knew about the mistakes long before they decided to tell taxpayers about them.

There was something else that was rather telling in the report’s summary:

“The Department failed to understand the impact of the Finance Act 2008 on the deadlines for collecting tax, and so is now unable to collect any of the estimated £650 million underpaid in 2006-07 and earlier.”

The annual Finance Acts clearly add further confusion to an already overly complex system. If the tax system was simpler it would be easier and cheaper to administer. Taxpayers wouldn’t receive letters on their doormat telling them that they owed yet more tax, after making decisions with their household budgets that were based on their monthly pay cheques. It places undue pressure on families and probably on the staff that work at HMRC too. The tax system needs to be radically simplified.The Public Accounts Committee has criticised HMRC for their mismanagement of the tax system. We’ve seen repeated bungles by the tax authority, and unfortunately stories of over payments, under payments and dodgy computer systems are not new. This morning’s news is no different: the implementation of a new computer system has delayed the processing of tax returns from 2008-09, causing “unacceptable uncertainty and inconvenience to the taxpayer”. HMRC has also failed to tackle a backlog of 18 million PAYE cases from 2007-08 and earlier, affecting an estimated 15 million taxpayers. The PAC estimate that £1.4 billion of tax was underpaid and there is £3.0 billion of overpaid tax to be refunded. What's more, HMRC knew about the mistakes long before they decided to tell taxpayers about them.

There was something else that was rather telling in the report’s summary:

“The Department failed to understand the impact of the Finance Act 2008 on the deadlines for collecting tax, and so is now unable to collect any of the estimated £650 million underpaid in 2006-07 and earlier.”

The annual Finance Acts clearly add further confusion to an already overly complex system. If the tax system was simpler it would be easier and cheaper to administer. Taxpayers wouldn’t receive letters on their doormat telling them that they owed yet more tax, after making decisions with their household budgets that were based on their monthly pay cheques. It places undue pressure on families and probably on the staff that work at HMRC too. The tax system needs to be radically simplified.

Latest Blogs:

TaxPayers' Alliance Icon

Aid spending needs to be more transparent

4:55 PM 08, Dec 2016 Harry Fairhead

TaxPayers' Alliance Icon

The sugar tax and the public finances

6:00 AM 05, Dec 2016 Harry Fairhead

TaxPayers' Alliance Icon

Working for the taxman

6:00 AM 26, Nov 2016 Harry Fairhead

TaxPayers' Alliance Icon

Further thoughts on the Autumn Statement

4:56 PM 24, Nov 2016 James Price