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Taxman 'could have done better' Tax letters: Taxman 'could have done better'
(40 minutes later)
Authorities "could have done better" to prepare people for demands of millions of pounds of back-tax, the UK's top taxman has told MPs.Authorities "could have done better" to prepare people for demands of millions of pounds of back-tax, the UK's top taxman has told MPs.
Permanent Secretary for Tax Dave Hartnett made the admission to MPs on the Treasury Committee. The Permanent Secretary for Tax, Dave Hartnett, made the admission to MPs on the Treasury Committee.
MPs were also told that HM Revenue and Customs has made a further concession over interest payments for those who owe more than £2,000. MPs were also told that HM Revenue and Customs had made a further concession over interest payments for those who owe more than £2,000.
More than two million people underpaid income tax in the last two tax years. More than two million people underpaid income tax in the past two tax years.
This was the result of errors in their Pay As You Earn (PAYE) tax code.This was the result of errors in their Pay As You Earn (PAYE) tax code.
About 900,000 taxpayers will not have to pay anything after the government raised the write-off threshold from £50 to £300, leaving 1.4 million people owing about £2bn, or £1,428 each on average. About 900,000 taxpayers will not have to pay anything after the government raised the write-off threshold from £50 to £300, a concession costing the Treasury £160m.
This left 1.4 million people owing about £2bn, or £1,428 each on average.
Letters
Dave Hartnett was appearing before the MPs on the Treasury Committee, together with Dame Lesley Strathie, HMRC chief executive, and Bernadette Kenny, director general of personal tax.
Dame Lesley - who noted that the PAYE system broadly worked for more than 80% of PAYE taxpayers - said that she had "empathy" for those facing underpayments and wished to make it as easy as possible for them to pay.
In a significant change in policy announced at the committee, she said that people who owed more than £2,000 in tax would not have to pay interest if the tax authority gave them extra time to pay.
"Where people need time to pay, they will not be charged interest," she said.
Ministers had asked for the change, and there is currently no estimate of the cost of the concession to the Treasury.
Mr Hartnett explained that the concession was designed to give the same treatment to all taxpayers, whatever they owed.
He also said that HMRC needed to improve communications with its customers.
Some 45,000 customers have been receiving letters from HMRC and 14,000 have so far cashed refunds as they had overpaid tax.
Dame Lesley said that a decision would be made later in September over how and when the remaining letters would be sent out.