HMRC apologises to taxpayers for their massive tax statement mistakes.
Since mid-September, HMRC has been sending inaccurate tax statements and tax rebate cheques to taxpayers. They have finally apologised for these errors and officially state that only a small number of the P800 tax statements have been incorrect. Although this does contradict the internal department note to stakeholders which said that they didn’t know the exact figure and that it could be many thousands of employees.
The official statement given reads, “HMRC is urgently investigating this matter to resolve the issue. In the meantime, customers who think their 2013/14 P800 may be wrong should contact our helplines for further advice before making repayments or cashing cheques. We are sorry for any worry or inconvenience caused.”
Not just important to the individual tax payer
This situation has provoked serious responses from those working in the financial sector. For example, a KPMG tax director said urgent investment in HMRC systems was needed and the ATT demanded an ‘urgent review’ of the Real Time Information system.
Problems may have been avoided, if only HMRC had listened.
It was also reported that the ATT’s president Natalie Miller said that this huge system error demonstrates how important it is for all those with a stake in the success of RTI to work together. “We have been drawing HMRC’s attention to the quirks and complexities of RTI in meetings and correspondence from its inception. We have also highlighted the significant burdens it places on employers and agents. What we are seeing now are real and serious practical problems for possibly many thousands of employees at a time when building confidence in the system is crucial. Some of those difficulties might have been avoided if HMRC had heeded advice from ATT and similar bodies at an early stage.
What MUST be done now?
The president of the ATT calls for an immediate review of the Real Time Information system “to ensure that it is fit for purpose”. Not only should we be able to trust the system which processes our tax payments, but it is also a major part of the new Universal Credit system which will take over delivering state benefits. Miller suggests that a review includes understanding why employers had not sent in final payment statements for 2013-14 (as stated by HMRC) and why HMRC acted on incomplete information. Are employers struggling to understand the system? Can the system “identify when important information is missing”? If they did know, why did HMRC issue tax statements based on only partial information? These are fundamental questions which HMRC must answer in a timely fashion in order to restore taxpayers’ faith in the department.
Steve Wade, tax director at KPMG, gives us his take on what needs to be done. He said HMRC systems were “not designed to deal with all the complexities of PAYE” and so “there are some fairly major issues with the IT and HMRC systems and fixing them requires significant investment be the tax authorities”. He says that there needs to be “urgent investment” in the “processing and back end software….which collect and process data to generate the operational efficiencies when the whole RTI initiative was conceived”. Wade said that “more and quicker feedback” to employers’ agents and software developers about any issues that come up would also improve the system.
HMRC needs to restore faith of British taxpayers
This entire mess has led to greater frustration with the Tax Office and their seeming inability to process accurate tax statements for ordinary tax-paying workers. As Jason Piper, technical manager at ACCA, said, “Yet again, we are seeing errors in the operation of PAYE, and HMRC must learn the lessons from earlier problems and be transparent and accountable this time round.” If only…!