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| Six million people in UK have overpaid or underpaid tax | Six million people in UK have overpaid or underpaid tax |
| (6 days later) | |
| Nearly six million people in the UK have paid the wrong amount of tax. | Nearly six million people in the UK have paid the wrong amount of tax. |
| About £2bn was underpaid via the Pay as You Earn (PAYE) system in the past two years, with about 1.4 million people owing an average of £1,500 each. | About £2bn was underpaid via the Pay as You Earn (PAYE) system in the past two years, with about 1.4 million people owing an average of £1,500 each. |
| But £1.8bn has also been overpaid and some 4.3 million people will get a rebate because they have paid too much. | But £1.8bn has also been overpaid and some 4.3 million people will get a rebate because they have paid too much. |
| Treasury minister David Gauke said that in the current financial climate, the government was not in a position to "just wave goodbye" to the money owed. | Treasury minister David Gauke said that in the current financial climate, the government was not in a position to "just wave goodbye" to the money owed. |
| He said the government had inherited the problem and the PAYE system - which was created in the 1940s - was struggling to cope with modern working patterns. | He said the government had inherited the problem and the PAYE system - which was created in the 1940s - was struggling to cope with modern working patterns. |
| A spokesman for HM Revenue & Customs (HMRC) rejected suggestions that as many as 10 million people might be eligible for a rebate because there is a backlog of unresolved cases from the years before 2008-09. | A spokesman for HM Revenue & Customs (HMRC) rejected suggestions that as many as 10 million people might be eligible for a rebate because there is a backlog of unresolved cases from the years before 2008-09. |
| "We don't recognise the 10 million figure, just because a case is open does not mean a refund is due," he said. | "We don't recognise the 10 million figure, just because a case is open does not mean a refund is due," he said. |
| Notification letters | Notification letters |
| A new computer system introduced by HMRC in 2009 has allowed more discrepancies to be identified. | A new computer system introduced by HMRC in 2009 has allowed more discrepancies to be identified. |
| As a result millions of letters will be sent to taxpayers across the UK informing them of errors in their contributions. | As a result millions of letters will be sent to taxpayers across the UK informing them of errors in their contributions. |
| The first 45,000 are expected to arrive on Tuesday, with 30,000 informing recipients they are due a rebate of on average £418. | The first 45,000 are expected to arrive on Tuesday, with 30,000 informing recipients they are due a rebate of on average £418. |
| The remaining 15,000 letters will tell taxpayers they have underpaid and will have their tax code altered next year to recoup the money. | The remaining 15,000 letters will tell taxpayers they have underpaid and will have their tax code altered next year to recoup the money. |
| It is thought that some individuals may face both underpayments and overpayments, which could cancel each another out. | It is thought that some individuals may face both underpayments and overpayments, which could cancel each another out. |
| Discrepancies arise when the amounts deducted in tax and National Insurance by employers using the PAYE system do not match the information held on HMRC records. | Discrepancies arise when the amounts deducted in tax and National Insurance by employers using the PAYE system do not match the information held on HMRC records. |
| This most often occurs when individuals change jobs, have more than one job at the same time, or because employers are using the wrong tax code. | This most often occurs when individuals change jobs, have more than one job at the same time, or because employers are using the wrong tax code. |
| In some cases officials say they will consider writing off demands for additional money if taxpayers can demonstrate they provided all the information necessary to calculate their tax correctly. | In some cases officials say they will consider writing off demands for additional money if taxpayers can demonstrate they provided all the information necessary to calculate their tax correctly. |
| An HMRC spokesman told the BBC: "The overwhelming majority of PAYE cases - over 40 million - are right, so most people have paid the right amount of tax. | An HMRC spokesman told the BBC: "The overwhelming majority of PAYE cases - over 40 million - are right, so most people have paid the right amount of tax. |
| 'Boost accuracy' | 'Boost accuracy' |
| "But for a variety of reasons in some cases there will be a discrepancy. | "But for a variety of reasons in some cases there will be a discrepancy. |
| "The government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy." | "The government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy." |
| John Whiting, from the Chartered Institute of Taxation, told the BBC that some of the poorest, including those who received means-tested benefits, could have been hit twice, as their benefits would have been incorrectly calculated. | John Whiting, from the Chartered Institute of Taxation, told the BBC that some of the poorest, including those who received means-tested benefits, could have been hit twice, as their benefits would have been incorrectly calculated. |
| "It is very difficult to go back and claim benefits you underclaimed, whereas, as demonstrated, if you owe tax it is possible for the revenue to back claim there," he said. | "It is very difficult to go back and claim benefits you underclaimed, whereas, as demonstrated, if you owe tax it is possible for the revenue to back claim there," he said. |
| Mr Gauke said the government wanted to move sensitively and cautiously but he recognised the difficult situation some people were facing was "through no fault of their own". | Mr Gauke said the government wanted to move sensitively and cautiously but he recognised the difficult situation some people were facing was "through no fault of their own". |
| He added: "At the moment we have said that those who owe more than £2,000 - those who are obviously in the most difficult position - we're reviewing exactly how we're going to do that. | He added: "At the moment we have said that those who owe more than £2,000 - those who are obviously in the most difficult position - we're reviewing exactly how we're going to do that. |
| "For those who owe less than that we will be seeking to recover that over the course of the 2011-12 tax year through tax codes." | "For those who owe less than that we will be seeking to recover that over the course of the 2011-12 tax year through tax codes." |
| 'Heartless' | 'Heartless' |
| George Mudie, a Labour MP and member of the Treasury Select Committee, told the BBC he believed there was a case for waiving the debt owed by those who had underpaid. | George Mudie, a Labour MP and member of the Treasury Select Committee, told the BBC he believed there was a case for waiving the debt owed by those who had underpaid. |
| He said he believed the HMRC had handled the situation badly and unfairly. | He said he believed the HMRC had handled the situation badly and unfairly. |
| He described the HMRC as a "heartless" and "arrogant" organisation and said: "If they want money, they take the money and very rarely are they prepared to consider, even when they make mistakes, not taking the money." | He described the HMRC as a "heartless" and "arrogant" organisation and said: "If they want money, they take the money and very rarely are they prepared to consider, even when they make mistakes, not taking the money." |
| Emma Boon, from campaign group the Taxpayers' Alliance, said the HMRC must take steps to help those told they have to pay more. | Emma Boon, from campaign group the Taxpayers' Alliance, said the HMRC must take steps to help those told they have to pay more. |
| "Some of them won't be finding out about it for a few weeks or maybe even a few months, so it could be towards Christmas which really isn't what you want to hear," she said. | "Some of them won't be finding out about it for a few weeks or maybe even a few months, so it could be towards Christmas which really isn't what you want to hear," she said. |
| In June, the government ordered a review of how the PAYE system works and is encouraging the public to contribute their thoughts about how it could be improved. | In June, the government ordered a review of how the PAYE system works and is encouraging the public to contribute their thoughts about how it could be improved. |