Hope of exemption after tax blunder
A CHARTERED tax consultant says that people in Northern Ireland may be able to get exemption from repaying an average £1,500 after a massive blunder by HM Revenue and Customs (HMRC).
The comments came after it was revealed at the weekend that nearly six million people have paid the wrong amount of tax.
A total of 2 billion has been underpaid through the Pay as You Earn (PAYE) system over the past two years. It means that the 1.4 million taxpayers concerned will be required to shell out an average of almost 1,500 each to make up the shortfall.
On the positive side, however, 4.3 million people will have better news, with the taxman informing them they have paid too much tax. With a total overpayment of 1.8 billion, each could receive an average rebate of 418.
Lisburn Taxation Consultant Ivor McCandless said that it was not yet clear exactly how the problems had occurred, as the news only broke on Saturday.
"However the early indications are that this mainly applies to people with multiple sources of income, be that jobs or pensions," he said.
"It appears that the same taxcode may have been erroneously applied in such cases to each source of income. But this has then mistakenly given such people a much bigger tax break than they were really entitled to.
"However people who are facing demands to repay this tax may be able to claim 'official error' in their defence," he said. "This means that if they are able to prove that HMRC had all the proper information it needed to carry out its job, the taxpayer can be exempt from paying the sum requested."
Mr McCandless said it was not yet clear how so many people had been overcharged tax and were due rebates. Neither did he have any idea yet how many people in Northern Ireland might be affected.
Assemblyman Simon Hamilton, chair of the assembly committee on social development, described the blunders as "an absolute disgrace".
"People will have to find a way to repay money that is asked of them," he said. "But they must make sure they are given a repayment plan which they can financially manage.
"The situation may be even worse for people who have lost their jobs since they settled their last tax bill and may not be in a position to repay this extra money," he added.
The first 45,000 letters from HMRC are expected to arrive on doormats on Tuesday.
HMRC head of national news Paul Franklin told BBC Radio 4's Money Box programme: "The roots of this are in the fact that PAYE came in 1944 during the Second World War, at a time when many people stayed with the same employer during the whole of their working lives. It's not like that any more. We have to reflect that and have new systems."
Millions more letters will go out by Christmas to the rest of those caught up in the blunders.
Treasury minister David Gauke told Sky News: "It is right that people pay what is due, it is right that we seek to recover these sums but we ought to do that in a sensitive way. Unfortunately, we have inherited this mess, we are doing what we can to address it in a fair way."
l See Morning View, page 16
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Monday 13 February 2012
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