Should we pay for HMRC’s tax miscalculations?

This does not surprise me at all.
I manage my mother’s tax affairs and about 2months ago was sent a demand for 28 pence!!! due to their calculation errors. When challenged on this, particularly the cost of advising me and processing a cheque I was told that the public would expect all outstanding debts to be collected. What rubbish as it would probably cost £15 to collect 28p. I offered to pay it in the forth coming tax year in the normal tax system. This would be OK I was told but would have to add interest of 10p —————30% interest.
Irrespective of the small sum involved the principle stinks. No wonder the HMRC is a laughing stock, but unfortunately for most tax payers it is not economic to employ professional accountants to ensure that only the correct tax is paid with all the various allowances. Unfortunately HMRC has the upper hand.

Watch out for fraudsters that may prey on you when you’re trying to sort out this overpaid or underpaid tax. HMRC will only contact you by post, not by email or phone.

The HMRC website gives the following advice: ‘HM Revenue & Customs (HMRC) would not inform customers of a tax rebate via email, or invite them to complete an online form to receive a rebate of tax. Do not visit the website contained within the email or disclose any personal or payment information.’

http://www.which.co.uk/news/2010/09/tax-demands-fraud-risk–227745/

The tax system is outrageous and grossly unfair. Tax is extortionate. If you calculate your income tax, NI, VAT, Council tax and other taxes, the prportion of your own money taken it is quite unreasonable. We really do need to cut back government; it wastes so much.
The tax system is so complicated that the tax man and accountants do not cope with it, so why should normal people be penalised for errors that are not of their making?
The system must be simplified to reduce cost of collection, cost to taxpayers if they have to seek accountancy advice and the likelihood of errors.
The taxman should also pay interest on overpaid tax at the at the same rate that is charged for overdue tax. The present system of differential rates is also quite unfair.
The concept of the taxman taking control of wages and salaries in order to deduct tax and then passing the balance on is totally unacceptable. It is a first step towards a communist state where the government doles out a living allowance according to its opinion on your worth.
Why is NI separate from tax? It is really just another income tax and a complication.
Why do MPs have a special tax system? They should be in the same boat as the rest of us.

From media reports I heard that this tax foul up is due to a computer error. If this is the case then how does a computer of this complexity get its information so that it can calculate everyones tax ? It comes from a human being and as such the blame should sit squarely on the those shoulders. People who owe tax to HMRC should not be expected to repay the amount asked. I realise that mistakes happen in all walks of life but the HMRC systems should be more scrutinised to prevent this kind of error.

It is, indeed, outrageous that HMRC can cause such havoc by collecting the wrong amounts of tax. Blaming computer systems is the norm that we should not accept – people in HMRC (or the computer system contractor) should be taken to task over this. Correcting the errors will be costly in both payments and administering them. The difficult part is that whatever finances are used to put this right – are not HMRC’s finances or Government finances. Neither of these actually have any finance. It is public money paid by the public at large and has already been spent before it was collected (which is why we have a national debt). Whilst we all wish to see refunds made for over collected tax – we must remember who will be financing this – all other taxpayers. Hopefully, the amounts of underpaid tax will be paid up and cover much, if not all the cost. However, let us not forget that ALL government mistakes are paid for by the public at large. This current problem was, of course, inherited by our new coalition government from the previous Labour administration and the tax issue probably created as a result of merging the Inland Revenue with Customs & Excise.

It is a disgrace that our Administrations are incapable of getting computer software right – and at a huge cost to the taxpayer, and no doubt huge profits to the providers. Perhaps we could ask Universities to undertake this work in future – lots of bright people and the payments would help education’s future?
However, back to underpaid and overpaid tax. There is no such thing as Government money – the money is yours and comes out of your pocket. So, do you want to give more of your money to those who are fortunate enough to have been charged too little tax, when you have perhaps been charged too much? The assumption seems to be that all undercharged and being asked to repay are low paid and in dire staits – not the case, they are a mix of people. The answer is surely to make sure that those who are in genuine need have more time to pay than one year.

We’re going to be dealing with some of these points on the Money Podcast, which you can hear on Tuesday.