HMRC may write off significant sums in tax

HMRC1HM Revenue and Customs (HMRC) is considering writing off £1.5 billion in unpaid tax.

According to reports from the BBC, there are currently 7.5 million of backlogged cases where there has been underpayment or overpayment of taxes going back to 2007/08.

The latest cases have emerged after HMRC has already conceded that some 6 million taxpayers have paid the wrong amount of tax over the past two years as a result of errors in the PAYE system.

Staff at HMRC informed the BBC that only those cases outside of the two-year window which suggest fraudulent activity will be pursued.

Because many of the cases are more than two years old, claims for the money owing could be open to legal challenges from taxpayers.

A staff member said: “For each underpayment there are thousands of pounds owed. Underpayments are very frustrating.

“If we had the chance to sort it out three years ago we could have recovered the money. It is now likely to be written off if it’s over two years – we’re not looking at underpayments beyond two years.

“Our directors are telling people that those who owe tax will appeal and fight it and this will generate more work.”

Since the latest cases are not logged on HMRC’s new computer system, any problems would have to be processed by hand.

Another HMRC staff member told the BBC: “These people who have underpaid earn £30k, £40k, £50k a year and got benefits such as a company car and we’re not told about them until after the tax has been paid.

“The cases cannot be dealt with by the new computer as they have to be done manually – what did we do with the cases older than two years? We wrote them off.”

The official line of HMRC is that in cases where people have paid too much tax taxpayers will receive a refund but that cases of underpayment are still being assessed.

A spokesman commented: “We have said to staff if you find an overpayment to pay it back – we are prioritising vulnerable groups, old age pensioners, low-income groups – the priority is to repay these groups.

“But while we are reviewing the cases of underpayment, no decision has been made on these cases.

“It’s a provisional period, where staff have been asked to review underpayments. If they find someone who has underpaid then that is set aside for a future decision.

“We are going to be looking at at how best to deal with these. We are going to look at the specifics of each case and apply a normal criteria in due course.

“Those who have underpaid, they will be part of the overall decision-making process – no decision yet on what to do with them. But they are being identified.”

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