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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. |
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 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 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, 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. |