UK - Taxman holds his tongue over £18m error

By Jason Nisse

11 February 2001

The Inland Revenue overcharged up to a million taxpayers because of computer errors and then failed to tell them about it, the Independent on Sunday has learned.

Auditors going through the taxmen's accounts have found a problem going back to the 1997-98 tax year. It appears the Revenue cleared the accounts of about a million people on PAYE without checking if they paid the right amount of tax.

The problems occurred because the Revenue was moving to a new computer system being built and run by US technology giant EDS. At the same time, it was introducing self- assessment. The combination of this, overheads and a few IT problems, led to the Revenue deciding that checking these tax bills was too much work.

The National Audit Office has estimated that if the Revenue had checked, it would have found the vast majority of people had actually paid too much tax – £18m too much. On the Revenue's best estimates, the underpayment of tax because of its errors was £4m, but the overpayment was £22m.

Now it has been found out, the Revenue is belatedly contacting taxpayers. "When we made the decision to clear cases, we estimated from our data that the amounts of underpayments and overpayments would broadly balance out," said a spokeswoman. "We will be writing to the taxpayers affected later in the year to explain the situation and invite them to check the position."

http://www.independent.co.uk/news/Business/Inside_Business/2001-02/tax110201.shtml

-- Doris (nocents@bellsouth.net), February 11, 2001