Yet another blunder by HMRC means over a million face an unwelcome bill

October 19, 2011 10:44 AM

This weekend, you may get an unwelcome letter on your doormat from the taxman. Thanks to yet another blunder over a million taxpayers will have to pay back an average of £600 each, including 150,000 pensioners. Excessive taxes, rising utility bills and excessive fuel duty are already hitting families hard, so the last thing they need is for HMRC to demand cash from them – particularly when it’s HMRC that made the blunder in the first place.

Unfortunately, this seems all too familiar. Just over a year ago an almost identical error occurred, affecting a similar number of taxpayers. The Public Accounts Committee also took HMRC to task, saying that they had caused "unacceptable uncertainty and inconvenience to the taxpayer." Since then, many have appealed demands for repayment. Incredibly, according to reports, some appeals have been turned down because taxpayers ‘should have picked up’ on the errors.  With just under 70,000 staff – the same as the population of Doncaster – you’d have thought that sorting these things out was the job of this army of bureaucrats.

Why can’t HMRC get it right? Is it incompetent staff? Is it down to bad Government IT? The real answer is that the hideously complicated and labyrinthine tax system means that administering it is costly for taxpayers. And three times over too: once in the high taxes they pay as a result; twice in the even higher taxes to pay for enough staff to cope with it; and thrice in response to letters from the taxman asking them to cough up again. It’s simply not good enough, and minor tweaks to the tax system will not remedy these ills. We need significant tax reform that drastically simplifies the system and reduces the burden on ordinary families and everyday businesses. Look out for the report of the 2020 Tax Commission in the new year, which is working out the steps to get us there.This weekend, you may get an unwelcome letter on your doormat from the taxman. Thanks to yet another blunder over a million taxpayers will have to pay back an average of £600 each, including 150,000 pensioners. Excessive taxes, rising utility bills and excessive fuel duty are already hitting families hard, so the last thing they need is for HMRC to demand cash from them – particularly when it’s HMRC that made the blunder in the first place.

Unfortunately, this seems all too familiar. Just over a year ago an almost identical error occurred, affecting a similar number of taxpayers. The Public Accounts Committee also took HMRC to task, saying that they had caused "unacceptable uncertainty and inconvenience to the taxpayer." Since then, many have appealed demands for repayment. Incredibly, according to reports, some appeals have been turned down because taxpayers ‘should have picked up’ on the errors.  With just under 70,000 staff – the same as the population of Doncaster – you’d have thought that sorting these things out was the job of this army of bureaucrats.

Why can’t HMRC get it right? Is it incompetent staff? Is it down to bad Government IT? The real answer is that the hideously complicated and labyrinthine tax system means that administering it is costly for taxpayers. And three times over too: once in the high taxes they pay as a result; twice in the even higher taxes to pay for enough staff to cope with it; and thrice in response to letters from the taxman asking them to cough up again. It’s simply not good enough, and minor tweaks to the tax system will not remedy these ills. We need significant tax reform that drastically simplifies the system and reduces the burden on ordinary families and everyday businesses. Look out for the report of the 2020 Tax Commission in the new year, which is working out the steps to get us there.

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