Tax gets interesting

September 15, 2010 6:19 PM

For the second time in less than a week HMRC has had to u-turn on the handling of the PAYE debacle.  After being hauled before the Treasury Select Committee, Dave Hartnett, the top taxman at HMRC, now says millions of people who underpaid tax as a result of his department’s mistake will not have to pay interest on the money they owe.  He’d initially said they’d have to pay as much as three per cent.

This change of heart comes after an embarrassing back down for the beleaguered HMRC boss on Saturday, when the BBC released an interview where Hartnett said he would not apologise for PAYE mistakes.  I was interviewed by BBC Breakfast and ITV news and condemned Hartnett for his failure to say sorry.  By that evening Dave Hartnett had issued an apologetic statement, admitting that he had been insensitive.

Dave Hartnett was not alone as he gave evidence to the Treasury Select Committee (it’s their job to examine HMRC’s administration and policies).   HMRC chief executive Dame Lesley Strathie was also called and claimed that the mistakes have only come to light now due to the increased accuracy of a new IT system.  But this blame game will not help hard-pressed taxpayers who will have an unexpected bill for hundreds of pounds dropping onto their doormat sometime in the next few months.

The story of 6 million taxpayers charged the wrong amount of income tax is unlikely to go away any time soon.  Dame Lesley is now insisting that HMRC is fit for purpose, and that the annual reconciliation did not represent any mistake by her workforce.  Whether or not there is a good reason for 6 million mistakes all coming to light at once, taxpayers are still waiting for someone to take responsibility for these mistakes.  Those on the PAYE system cannot rest easy that mistakes will not happen again until that happens.

For the second time in less than a week HMRC has had to u-turn on the handling of the PAYE debacle.  After being hauled before the Treasury Select Committee, Dave Hartnett, the top taxman at HMRC, now says millions of people who underpaid tax as a result of his department’s mistake will not have to pay interest on the money they owe.  He’d initially said they’d have to pay as much as three per cent.

This change of heart comes after an embarrassing back down for the beleaguered HMRC boss on Saturday, when the BBC released an interview where Hartnett said he would not apologise for PAYE mistakes.  I was interviewed by BBC Breakfast and ITV news and condemned Hartnett for his failure to say sorry.  By that evening Dave Hartnett had issued an apologetic statement, admitting that he had been insensitive.

Dave Hartnett was not alone as he gave evidence to the Treasury Select Committee (it’s their job to examine HMRC’s administration and policies).   HMRC chief executive Dame Lesley Strathie was also called and claimed that the mistakes have only come to light now due to the increased accuracy of a new IT system.  But this blame game will not help hard-pressed taxpayers who will have an unexpected bill for hundreds of pounds dropping onto their doormat sometime in the next few months.

The story of 6 million taxpayers charged the wrong amount of income tax is unlikely to go away any time soon.  Dame Lesley is now insisting that HMRC is fit for purpose, and that the annual reconciliation did not represent any mistake by her workforce.  Whether or not there is a good reason for 6 million mistakes all coming to light at once, taxpayers are still waiting for someone to take responsibility for these mistakes.  Those on the PAYE system cannot rest easy that mistakes will not happen again until that happens.

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