HMRC's errors strengthen case for reform

August 09, 2012 5:22 PM

HMRC's blunders happen so frequently that it's almost surprising that they count as news. The latest reported story is of a Cumbria pensioner who was shocked to open a letter from HMRC demanding £16,022,012 in unpaid tax.

Enid Fisher, who was stunned to receive such a massive bill, eventually discovered that a HMRC official had put the date 16.02.2012 into the wrong box on the tax form. Following months corresponding with HMRC, Mrs Fisher discovered she didn’t owe them anything at all and was actually entitled to a £904 rebate.

Receiving a bill for unpaid taxes when HMRC themselves were at fault can be very distressing, similarly getting a letter for overpaid taxes can be welcome news. But while this was obviously an example of genuine human error, and the £16 million bill was clearly a mistake, errors are not always isolated accidents. Only last year HMRC sent out hundreds of thousands of letters for unpaid tax because of an administrative blunder demanding an average £600 from each taxpayer.

This isn’t just a reflection of poor administration but a fundamental deficiency in a tax system which is over complicated and desperately needs to be streamlined. While it wouldn’t remove all human error, the tax system proposed by our 2020 Tax Commission would drastically simplify our hideously complicated system and make it far easier for HMRC to administer. With fewer rules to handle they can focus on getting the amount they charge right. Only with a better tax system will HMRC be able to put a stop to these unending blunders.HMRC's blunders happen so frequently that it's almost surprising that they count as news. The latest reported story is of a Cumbria pensioner who was shocked to open a letter from HMRC demanding £16,022,012 in unpaid tax.

Enid Fisher, who was stunned to receive such a massive bill, eventually discovered that a HMRC official had put the date 16.02.2012 into the wrong box on the tax form. Following months corresponding with HMRC, Mrs Fisher discovered she didn’t owe them anything at all and was actually entitled to a £904 rebate.

Receiving a bill for unpaid taxes when HMRC themselves were at fault can be very distressing, similarly getting a letter for overpaid taxes can be welcome news. But while this was obviously an example of genuine human error, and the £16 million bill was clearly a mistake, errors are not always isolated accidents. Only last year HMRC sent out hundreds of thousands of letters for unpaid tax because of an administrative blunder demanding an average £600 from each taxpayer.

This isn’t just a reflection of poor administration but a fundamental deficiency in a tax system which is over complicated and desperately needs to be streamlined. While it wouldn’t remove all human error, the tax system proposed by our 2020 Tax Commission would drastically simplify our hideously complicated system and make it far easier for HMRC to administer. With fewer rules to handle they can focus on getting the amount they charge right. Only with a better tax system will HMRC be able to put a stop to these unending blunders.

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