Saturday, 11 August 2012

HMRC errors and the older taxpayer


Recently I was looking on-line for the first time at the record of a taxpayer who has been retired for thirty years. As one would expect, he isn't exactly in the first flush of youth, and although very much “on the ball” to the extent of doing his supermarket delivery order on-line, I don't expect him to be well up with our modern tax system.

Modern is a term I should use loosely. Of course I mean “current” in that the system creaks badly because HMRC relies too much on automation and their computer systems, and have extracted the human element too much or too early.


My older taxpayer's record showed that he had had £1,500 tax coded out from his pension in 2011-12. That is quite a lot, and I could not see where this previous apparent underpayment of tax had arisen. The on-line details were not sufficiently specific.

We asked for an explanation from HMRC over the telephone, but the agent could not help and said he would arrange for a letter of explanation to be sent.

To HMRC's credit, that letter arrived within two weeks. However it explained that the underpayment of tax had arisen in 2005-06 but had been collected in 2008-09 so it hadn't needed to be collected again.

Goalpost shifting

All this is a bit worrying. In an era where HMRC wants to move the goalposts further than they have already done informally with regard to ESC A19 because they say they are better at end-of-year reconciliation of liabilities, I cannot see how they would have picked up this error from way back if someone like me hadn’t picked it up.

Crying foul

We expect HMRC to hold errant taxpayers to account. We expect them to collect “the right amount of tax” by which I mean the amount properly due under the law. Unfortunately we as taxpayers do not seem to be able to hold HMRC to account over their errors.

I am going to ask for interest on the refund due as a consequence over and above the generous 0% currently prescribed. I will be wasting my time no doubt, but my older pensioner has been deprived of a not inconsiderable amount of money over twelve months. He should be entitled to compensation, don't you think?

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