Tax Blunder By HMRC Means Millions Owe Money

By Darren McCaffrey, Sky Politics Reporter

Millions of people will be forced to hand money to the Government after paying the wrong amount of tax because their bills were miscalculated.

The blunder by HM Revenue and Customs (HMRC) relates to the Pay As You Earn system (PAYE) last year.

Around 3.5 million people are thought to have paid too little tax as a result of the errors and will now have to pay the money over the coming years.

A further two million paid too much and will be able to claim it back by the end of the tax year, next April.

The estimated average mistake for individuals is around £300.

While errors are made every year, 2013-14 has seen an increase on the previous year with 5.5 million people affected compared to 5.2 million the year before.

This is despite the introduction of a £270m scheme designed to make the tax system more effective.

The HMRC's new Real Time Information (RTI) programme allows employers to report wage changes on a weekly or monthly basis.

This should ensure the process of making tax payments is more accurate.

A spokesman for HMRC defended the current system: "Most people pay the right tax throughout the year, but there will always be a small percentage of the 41 million people in PAYE who have underpayments or overpayments at year end."

He added: "The effect of Real Time Information is not reflected yet as it has not bedded in but, over time, RTI will help to reduce the number of cases that have to be reconciled."

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