HMRC: Getting tax wrong since 2005... and earlier

There was further embarrassment for the taxman this weekend after the Commons Treasury Committee criticised HM Revenue & Customs (HMRC) for poor performance and ‘endemic delays’.

HMRC was formed in 2005 when Inland Revenue and Her Majesty’s Customs and Excise were merged. Like the two organisations that were combined to form it, HMRC hasn’t always gotten things right and caused problems for millions of taxpayers in the process. This latest report by MPs was ordered after last year’s PAYE debacle when HMRC had to admit that 6 million people had been paying the wrong income tax in previous years.

Almost 1.5 million people had to pay back an average of £1,500 each, after being told they had been underpaying because of faulty calculations. At the time we were very critical of the tax office, and said that things had to improve. This newest report reveals that the department is in crisis and confirms they still aren’t getting it right – and taxpayers are the ones left to pick up the pieces.

Let’s not forget that isn’t even their biggest mistake, as John O’Connell blogged in February this year when the Public Accounts Committee criticised HMRC for their mismanagement of the tax system and a few years before that the tax office lost 25 million taxpayers’ details that had been copied onto a disc - whoops!

Key complaints raised in this latest report were:

    • The continuing legacy of unresolved tax discrepancies from past years still affecting millions of tax payers


    • Taxpayers had to wait as long as three months just to receive a reply to a letter


    • Excessive reliance on the internet for filing tax returns, or giving information, to the disadvantage of those without good internet connections, such as the elderly


    • "Overly ambitious" IT projects such as plans to make employers submit "real-time" data for the PAYE system


    • Increasingly complex tax laws.


    • Just 48 per cent of telephone calls made to HMRC offices are answered


    • The use of 0845 phone numbers by HMRC for customer queries. The committee suggested that cheaper 0345 numbers are used.

We cannot go on with the system in total disarray like this, it's failing millions of taxpayers and we’ve put up with too many mistakes and excuses for too long. Last time it was a new IT system that was blamed, now it is staff shortages. Enough is enough.

At least after this most recent debacle Mike Clasper, chairman of HM Revenue & Customs, came out and apologised. Last year it took Dave Hartnett a full day to put his hands up and say sorry, after initially telling the BBC that he “had nothing to apologise for”. The attitude may have changed, but the problems still remain. It is too hard to make contact with HMRC, and it is often too difficult to understand the information and guidance.

The problem of increasingly complex tax laws, highlighted by the committee, is one that we have been shouting about since our inception. The 2020 Tax Commission (a joint project with the Institute of Directors) will release a report early next year that will look at ways to address this and other problems with our tax system. We released a video featuring the world’s fastest speaker to underline how long the UK tax code now is.

The taxman must get his house in order, taxpayers should not have to tolerate another fiasco.

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