More UK Tax Issues Crop Up

Bogus refunds and more demands for underpayment of taxes

2 min read
More UK Tax Issues Crop Up

I have been blogging about the UK's Her Majesty's Revenue and Customs (HMRC) Pay-As-You-Earn (PAYE) computerized tax system fiasco in a kind of never ending story sort of way for the past couple of years. And the saga soldiers on.

This past week, a story in the London Telegraph tells of some UK accountants discovering that the tax system software was informing every one of their clients who were doing tax self assessments that they were owed a tax refund of between a few pounds to as much as £24,000. The accountants knew this information was incorrect since many of their clients in fact owed taxes.

The reason seems to lie somewhere in an "upgrade" of some sort to the self assessment tax software. As explained by the Telegraph:

"Frank Nash, tax partner at [chartered accountants] Blick Rothenberg, said: 'HMRC's online system for self assessment was down a couple of days ago. It was resurrected and when we went on to it to look at our clients' statements of account to tell them what their current tax situation was, we noticed that everybody was due a repayment.' "

The HMRC admitted that indeed a "small number" of accountants and their clients were affected by some sort of system glitch, but not to worry - everything would turn out right in the end.

Uh-uh.

The Telegraph article also mentioned that, "A package worth £600,000 a year pro rata was agreed to keep Deepak Singh as acting [HMRC] chief information officer (CIO) for an extra three months after he failed to land the post permanently."

Apparently, Mr. Singh was the tax system's chief architect and he quit after not getting promoted to CIO. So HMRC decided to almost quadruple his pay to return as acting CIO for the three months until the new permanent CIO arrived.

This pay deal has not pleased many people.

In another Telegraph article, Dame Lesley Strathie, HMRC’s chief executive, acknowledged that millions more UK taxpayers likely owe or are owed money above the already estimated 6 million or so. How many more, the HMRC doesn't know.

Dame Lesley also said that PAYE-related mistakes will likely occur for the next two years until the tax system stabilizes.

In addition, she said the fiasco has cost the HMRC roughly £170 million so far.

However, I guess, the IT behind the new system is still working as it should.
 

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